QuickTake Q&A: Volkswagen Embarks on Life After Diesel Scandal

Volkswagen AG Chief Executive Officer Matthias Mueller, who took charge amid the fallout from the emissions-cheating scandal known as Dieselgate, is set to present the manufacturer’s strategy Thursday for the decade ahead. The goal is to pivot from crisis mode and prepare the German auto giant for an era of electric and self-driving cars.

1. What’s happening?

In the wake of the emissions scandal, VW hired outside experts including strategy chief Thomas Sedran, a long-time AlixPartners and Roland Berger consultant, and digital head Johann Jungwirth, formerly with Apple, to help draft a revamp plan. A far cry from the traditional VW car guy, Jungwirth has said that most of the hours spent in cars is "lost time." (So much for Fahrvergnuegen, the old VW slogan that represented the enjoyment of driving.) He wants to adapt to a future of fewer drivers and efficient, reliable self-driving cars roaming unclogged streets.

2. What’s the problem?

Though Volkswagen’s marques include Audi, Lamborghini and Porsche, it’s the namesake that’s in the most trouble. Profit at the Volkswagen unit, the company’s largest, tumbled 86 percent in the first quarter. Herbert Diess, who heads the VW unit, wants to speed up change and cut costs. Bernd Osterloh, the carmaker’s top labor leader, wants job guarantees. Volkswagen also has to weed out slow sellers among its portfolio of more than 300 different vehicles spread across 12 brands, ranging from the 9,000-euro Seat Mii city car to the $2.7 million Bugatti Chiron.

3. What’s the cure?

Volkswagen needs to speed up decision-making, boost SUV offerings and accelerate development of more electric cars. To that end, the company plans to roll out 20 electric cars and plug-in hybrids by 2020. The carmaker, which was more than a decade behind Toyota in hybrids, is considering setting up its own battery factory. Its $300 million investment in ride-hailing app Gett was the first major financial commitment toward transport on demand.

4. What are financial markets and experts saying?

Volkswagen’s full-year adjusted earnings per share average estimate has risen 2.9% in the last four weeks, the most among the 16 carmakers and suppliers on the SXAP index, according to data compiled by Bloomberg. Analysts from HSBC, Deutsche Bank and Citi have said the company appears to be recovering from the emissions scandal and might be through the worst of the crisis even as settlement talks with U.S. authorities have yet to be finalized.

5. What are the potential surprises?

Volkswagen may try to separate its mass-market brands more clearly by offering fewer models in certain markets. It also could signal that spinning off non-core operations such as MAN Diesel & Turbo, which makes ship and machine engines, or Ducati motorcycles may eventually become an option after a decade of empire building.

The Reference Shelf

* A QuickTake explainer on why the road to clean cars has been so bumpy.
* A Bloomberg story on tumbling profits at VW’s namesake brand.

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