Dieselgate: Volkswagen Reportedly Taps Porsche CEO to Take the Wheel

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Matthias Muller - Porsche turned Volkswagen AG CEO

According to reports Thursday, Volkswagen AG is poised to name Matthias Müller, the current head of the company’s Porsche AG division, as chief executive of the entire company, according to the Wall Street Journal. Former Volkswagen CEO Martin Winterkorn, meanwhile, stands to garner as much as $67 million, depending on how the board calculates his severance package.

Reuters also reported that the R&D chiefs of Audi and Porsche will be removed by the VW supervisory board on Friday, as will VW’s top executive in the US, Michael Horn—who on Monday apologized for his employer’s “screwup” at a New York City launch event for the next-generation VW Passat, one of the sedans whose clean-diesel engine was manipulated.

Müller, at top, was named President and CEO of Porsche AG on October 1, 2010. He trained as a toolmaker and also studied information technology, according to his bio. The IT graduate joined Audi AG in 1977, where he was in charge of system analysis from 1984 to 1992. He oversaw the Audi A3 vehicle project from 1993 before assuming overall responsibility for product management at Audi in 1995. From 2003 on, he was responsible for all Audi and Lamborghini product lines and for their coordination.

He moved from Audi AG to Volkswagen AG in February 2007 to take charge of the projects department. In that capacity, he held global responsibility for all vehicle projects of the Volkswagen brand and all Group brands. He was made a General Representative of Volkswagen AG in July 2007 before being named Porsche AG President and CEO in 2010.

Impressive credentials, to be sure, although he’ll also need a PhD in crisis management to navigate the storm that continues at Volkswagen AG.

Unfortunately for Volkswagen’s incoming chief executive, the hits just keep on coming following the damning admissions in the unfolding Dieselgate scandal and Winterkorn’s resignation this week. Consumers and government officials, and not just in the US where state attorney generals are now launching probes of the embattled automaker and the lawsuits are piling up, are no doubt beginning to mistrust any claims by Volkswagen.

Car-buyers are already worrying about how the EPA’s nailing of Volkswagen over falsified emissions levels in “clean diesel” vehicles will affect the cars’ performance, resale value and compliance with clean-air standards, according to the Wall Street Journal. As the New York Times pointed out this week, it also rattles consumer confidence in auto industry as a whole, given the sector’s fraught relationship with testing.

Concerns are growing and will greatly damage Volkswagen’s sales and brand equity, especially if the company’s board of directors doesn’t move quickly and decisively to restore trust in the brand, its vehicles and its leadership by removing the people and the fixing the processes that enabled this situation in the first place.

The ramifications of Volkswagen’s failure are also reverberating in Europe, where the brand faces lawsuits over its emissions claims. The automaker’s worst scandal in its 78-year history worsened as Germany’s transport minister said on Thursday that VW had manipulated tests in Europe as well as the US. The UK has launched its own inquiry into car emissions and testing, reports the Guardian, with calls to rerun lab tests on suspect engines and conducting on-the-road emission tests.

In another ripple effect, Italy’s health ministry said Thursday it had ordered a study into possible health risks linked to diesel emission filters commonly used in vehicles throughout the European Union.

And if that’s not enough bad news, BMW is also involved in a back-and-forth over accusations that its clean diesel engines have failed emissions tests as well. CNBC reports that BMW’s diesel engines were “significantly” exceeding regulatory limits, with the BMW X3 2.0-liter diesel model producing 11 times more nitrogen oxide than the current level set by the European Union. The news led to a 7 percent drop in BMW’s stock price on Thursday.

BMW Diesel

And obviously the unfolding disaster dims the once-bright prospects for the modern approach to diesel fuel as a strong “green” alternative to gasoline in automobiles.

“VW is under pressure to act decisively,” according to AOL, “with its shares plunging since the crisis broke and German Chancellor Angela Merkel urging it to quickly restore confidence in a company held up for generations as a paragon of German engineering prowess.”

The whole mess begs the question of how much Winterkorn knew, as his resignation statement claims he was unaware of the emissions data-cheating, along with other senior leadership. Even German Chancellor Angela Merkel is being dragged into the whole sorry mess.

VW TDI

As Volkswagen’s board shores up its leadership and next steps, the finger-pointing continues over who knew about the emissions fraud, and what—if anything—they did about it. More details are emerging about how long at least some engineers and managerial personnel had to have known about the emissions “defeat device” that created false readings for regulators, because Volkswagen representatives were negotiating with US authorities over the implications for at least a year.

The reason Volkswagen’s cover-up became an issue at all, as multiple news outlets began reporting this week, is because Daniel Carder, the academic hailed by Reuters as “an unassuming” engineer, and his small research team at West Virginia University, produced a $50,000 study that proved VW was cheating on its emissions claims—a study that was published almost 18 months ago, and which Volkswagen apparently hoped would escape notice.

Carder is already being called anti-corporate and environmental hero. And now it’s Müller, who faces the gargantuan task of restoring trust in the badly-bruised Volkswagen brand and steering it out of crisis, who must emerge as a superhero if VW is going to make it through this mess.

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