It’s the biggest scam to hit
the global auto industry. No recall of a car, anywhere in the world, has ever
had such a distasteful flavour of deceit and intrigue. Germany based Volkswagen
has some of the best brands under its massive umbrella that cover cars,
motorcycles and commercial vehicles. These mega brands include Volkswagen, Audi,
Bentley, Lamborghini, Porsche, Bugatti, SEAT, Skoda, Ducati, MAN and Scania.
The scam involved
manipulations by the company that violated emission norms. Revelations from the
Environmental Protection Agency (EPA) in the US stated VW had dodged
environmental rules for which penalty could run up to more than $18 billion.
This could also result in the Volkswagen Group recalling 11 million cars built
anywhere between 2009 and 2015. Post this scam several lawsuits too are
expected to be filed against the company for its manipulations. Attorneys like Grant
& Eisenhofer of the US which have in the past taken up similar cases are
asking affected US citizens to come forward with their grievances so that they
can sue Volkswagen for damages. “We are here to help you make sure Volkswagen
keeps its promise. If you own or lease one of the nearly 482,000 affected
Volkswagen and Audi diesel vehicles, please call us at .........or fill out our
online form, and one of our attorneys will contact you to discuss your
situation and explain your rights,” their online statement said.
The emissions scam exploded
when the EPA issued a notice of violation (NOV) of the Clean Air Act (CAA) to
Volkswagen AG, Audi AG, and Volkswagen Group of America, Inc. alleging that the
four-cylinder Volkswagen and Audi diesel cars from model years 2009-2015
included software that circumvented EPA emissions standards for certain air
pollutants. California separately issued an In-Use Compliance letter to
Volkswagen, and EPA and the California Air Resources Board (CARB) both
initiated investigations based on Volkswagen’s alleged actions.
“Using a defeat device in cars
to evade clean air standards is illegal and a threat to public health,” said
Cynthia Giles, Assistant Administrator for the Office of Enforcement and
Compliance Assurance. “Working closely with the California Air Resources Board,
EPA is committed to making sure that all automakers play by the same rules. EPA
will continue to investigate these very serious matters,” she said in a
statement.
Affected diesel models included:
• Jetta (Model Years 2009 – 2015)
• Beetle (Model Years 2009 – 2015)
• Audi A3 (Model Years 2009 – 2015)
• Golf (Model Years 2009 – 2015)
• Passat (Model Years 2014-2015)
Volkswagen models, including those of Audi, sold in India
may also be affected by the emissions scam. No official statement has been made
on that front
Volkswagen accepts discrepancies
and heads roll
The scam shook the Volkswagen edifice terribly. Its
reputation took a massive hit. As a fallout of the massive US emission scandal
involving Volkswagen, the Volkswagen Supervisory Board not only restructured
the Volkswagen group but also recommended the immediate suspension of some of
its employees as well as roped in German and US lawyers to objectively
investigate and fully clarify the manipulation that led to the emissions
scandal.
Prof. Dr. Martin Winterkorn,
CEO of Volkswagen AG resigned from his post. Matthias Müller was named as his
successor.
"I am shocked by the
events of the past few days. Above all, I am stunned that misconduct on such a
scale was possible in the Volkswagen Group. As CEO I accept responsibility for
the irregularities that have been found in diesel engines and have therefore requested
the Supervisory Board to agree on terminating my function as CEO of the
Volkswagen Group. I am doing this in the interests of the company even though I
am not aware of any wrong doing on my part,” said the outgoing CEO in a
statement.
Matthias Müller (62) who was
appointed CEO of Volkswagen AG with immediate effect is currently Chairman of
Porsche AG in Stuttgart. He will continue in this function until a successor
has been found.
"My most urgent task is
to win back trust for the Volkswagen Group – by leaving no stone unturned and
with maximum transparency, as well as drawing the right conclusions from the
current situation. Under my leadership, Volkswagen will do everything it can to
develop and implement the most stringent compliance and governance standards in
our industry. If we manage to achieve that then the Volkswagen Group with its
innovative strength, its strong brands and above all its competent and highly
motivated team has the opportunity to emerge from this crisis stronger than
before," said Muller after his appointment.
The Supervisory Board
authorised the Chairman of the Group to mandate German and US lawyers to
objectively investigate and fully clarify the manipulation of emissions data of
diesel engines.
On September 22, 2015
Volkswagen admitted that, “Discrepancies relate to vehicles with Type EA 189
engines, involving some eleven million vehicles worldwide. A noticeable
deviation between bench test results and actual road use was established solely
for this type of engine. Volkswagen is working intensely to eliminate these
deviations through technical measures. The company is therefore in contact with
the relevant authorities and the German Federal Motor Transport Authority (KBA
– Kraftfahrtbundesamt).”
Volkswagen stated that it is
setting aside a provision of some Euro 6.5 billion (approximately US $ 7.2
billion) to cover the necessary service measures pertaining to software manipulations
resulting in circumventing emission standards. The money will also be used for
“other efforts to win back the trust of our customers”.
The company also stated, “It
is incumbent upon Volkswagen to initiate the process that will fix the cars’
emissions systems. Car owners should know that although these vehicles have
emissions exceeding standards, these violations do not present a safety hazard
and the cars remain legal to drive and resell. Owners of cars of these models
and years do not need to take any action at this time.
The company stated that it is working
at full speed to clarify irregularities concerning a particular software used
in diesel engines. “New vehicles from the Volkswagen Group with EU 6 diesel
engines currently available in the European Union comply with legal
requirements and environmental standards. The software in question does not
affect handling, consumption or emissions.”
It also noted that “Further
internal investigations conducted to date have established that the relevant
engine management software is also installed in other Volkswagen Group vehicles
with diesel engines. For the majority of these engines the software does not
have any effect.”
RECOMMENDATIONS
OF THE VOLKSWAGEN SUPERVISORY BOARD
With the information currently
available the Supervisory Board recommended the immediate suspension of some
employees. This process is already underway. While Matthias Müller will lead
the Volkswagen Group going forward as the new CEO of Volkswagen AG, the
Supervisory Board resolved to propose to the Extraordinary Meeting of
Shareholders on November 9, 2015 to elect Hans Dieter Pötsch as a member of the
Supervisory Board. The Supervisory Board intends to subsequently elect him as
its Chairman.
Berthold Huber, Deputy
Chairman of the Supervisory Board, said: "The test manipulations are a
moral and political disaster for Volkswagen. The unlawful behaviour of
engineers and technicians involved in engine development shocked Volkswagen
just as much as it shocked the public. We can only apologise and ask our
customers, the public, the authorities and our investors to give us a chance to
make amends." The Supervisory Board today commissioned an American law
firm to assist in further clarification and in preparing the necessary steps.
The Supervisory Board of
Volkswagen AG approved a new management structure for the Group and the brands
as well as for the North America region on September 26, 2015 in Wolfsburg,
Germany. The interim Chairman of the Supervisory Board, Berthold Huber,
commented: "The new structure strengthens the brands and regions, gives
the Group Board of Management the necessary leeway for strategy and steering
within the company, and lays a focus on the targeted development of
future-oriented fields."
Reorganisation
of the North America region / Successor Prof. Vahland
The Supervisory Board decided
on the reorganisation of the Group's activities in North America. The markets
in the USA, Mexico, and Canada will be combined and significantly strengthened
to form a new North America region. Effective November 1, the Group's
activities in the region will be led by Prof. Dr. Winfried Vahland (58),
formerly Chairman of the Board of Directors at Škoda, who in this new role
becomes a member of the Volkswagen brand Board of Management. Prof. Vahland's
successor as Chairman of the Board of Directors at Škoda will be Bernhard Maier
(55), until now Board Member for Sales and Marketing of Porsche AG. Michael
Horn (52) remains President and CEO of Volkswagen Group of America.
Porsche brand
group with Bentley and Bugatti
At Group level the management
structure will be oriented even more systematically to the modular toolkits.
These toolkits feature standardised technical components for each automotive
vehicle segment (volume, premium, sport and commercial vehicles). Consequently,
a Porsche brand group with Bentley and Bugatti will be established for the
sportscar and mid-engine toolkit. The toolkit strategy will come under the even
closer guidance of the Group CEO; a separate department will be set up for this
purpose. The Audi brand group with Lamborghini and Ducati will be continued as
will the Truck Holding, and the Power Engineering and Financial Services
business lines. The volume brands Volkswagen (with principal responsibility for
the modular transverse toolkit), SEAT, and Škoda will be represented by one
member each in the Group Board of Management.
New Group
functions for efficiency and future-oriented fields
Group functions will
concentrate more closely on efficiency and future-oriented fields;
organisational units, for example for Group product strategy, new business
fields, cooperations and holdings, connected car activities, and CO2 steering,
will therefore be set up. According to Huber, "new, strong Group
functions, such as for standardization and harmonized production processes,
will lay the timely foundations for efficient decision-making. We will become
faster and more agile." Furthermore, a Chief Technology Officer will
analyze and, if necessary, co-steer technical developments throughout the Group
as mandated by the Group Board of Management.
Upgrading of
brands and regions
At the same time, existing
corporate bodies, structures and processes will be streamlined at Group level,
in particular by strengthening the brands and regional accountability. To that
end the Volkswagen brand will introduce a management structure with four
regions, each led by a local CEO with a direct reporting line to the brand
Chairman, Herbert Diess.
Streamlining
the Group Board of Management
The production department at
Group level, until now led by Thomas Ulbrich in an interim capacity, will be
abolished with immediate effect. This is one consequence of delegating
responsibility to the brands and regions. Berthold Huber commented: "Going
forward, the brands and regions will also have greater independence with regard
to production. So it follows that they should also hold the responsibility for
these activities."
The interim Supervisory Board
Chairman emphasised that "one key point is that we are scaling back
complexity in the Group. In recent weeks, we have already undertaken important
steps such as separating Group and brand functions." He said the
developments of the last few days had underscored the urgency of this project:
"We will not lose any time. The new management model will be implemented
at the beginning of 2016." This would bring the Board greater freedom to
address urgent issues concerning Group strategy, development and steering.
Further Board
of Management changes
The Supervisory Board extended
the contract with Francisco Javier Garcia Sanz (58), Member of the Board of
Management of Volkswagen Aktiengesellschaft with responsibility for
Procurement, by five years.
Christian Klingler (47),
member of the Board of Management of Volkswagen Aktiengesellschaft with
responsibility for Sales and Marketing and member of the Volkswagen brand Board
of Management with responsibility for Sales and Marketing, is leaving the
company with immediate effect as part of long-term planned structural changes
and as a result of differences with regard to business strategy. This is not
related to recent events. The new CEO Matthias Müller will head the Sales
department at Group level in an interim capacity until further notice.
Jürgen Stackmann (54),
previously Chairman of SEAT, will take over Christian Klingler's function as a
member of the Volkswagen brand Board of Management. Stackmann is succeeded by
Luca de Meo (48), currently Audi AG Board of Management member for Sales and
Marketing. These personnel changes become effective from October 1.
5 million
Volkswagen passenger cars affected in emissions scandal
An internal evaluation in the
Volkswagen Group has revealed that approximately five million Volkswagen
Passenger Cars brand vehicles are affected worldwide. In total around 11
million cars from the Group has been affected. Certain models and model years
of these vehicles (such as the sixth generation Volkswagen Golf, the seventh
generation Volkswagen Passat and the first generation Volkswagen Tiguan) are
equipped exclusively with type EA 189 diesel engines.
As previously announced, all
new Volkswagen Passenger Car brand vehicles that fulfill the EU6 norm valid
throughout Europe are not affected. This therefore also includes the current
Golf, Passat and Touran models, a press statement from the company said.
Dr. Herbert Diess, CEO of the
Volkswagen Passenger Cars brand stressed, "We are working at full speed on
a technical solution that we will present to partners, to our customers and to
the public as swiftly as possible. Our aim is to inform our customers as
quickly as possible, so that their vehicles comply fully with regulations. I
assure you that Volkswagen will do everything humanly possible to win back the
trust of our customers, the dealerships and the public."
The Volkswagen Passenger Cars
brand will inform all markets worldwide how many of vehicles are affected
locally. We are working intensively on remedial measures in close coordination
with the certification authorities. The vehicles are and remain technically
safe and roadworthy, the release concluded.
Volkswagen to
refit diesel vehicles with EA 189 EU5 engines
Volkswagen announced its
action plan to correct the emissions characteristics of diesel vehicles. Under
the action plan, Volkswagen and the other Group brands whose vehicles are
affected will present the technical solutions and measures to the responsible
authorities in October. Customers with these vehicles will be kept informed
over the coming weeks and months. All of the Group brands affected will set up
national websites to update customers on developments.
“An internal evaluation on
Friday (September 25, 2015) established that a service procedure is required
for some five million vehicles from the Volkswagen Passenger Cars brand out of
a total eleven million Group vehicles worldwide. These vehicles from certain models
and model years (such as the sixth generation Volkswagen Golf, the seventh
generation Volkswagen Passat or the first generation Volkswagen Tiguan) are
fitted with Type EA 189 diesel engines,” the statement from Volkswagen read.
VW scam will
lead to enormous financial damages, says Muller of VW Group
Admitting that the recent
emissions scam committed by the Volkswagen Group will lead to enormous
financial damage which “it is still not possible to quantify as of today”, the
new CEO of Volkswagen Aktiengesellschaft, Matthias Müller, told a large gathering
of VW workers that he would provide a "swift and relentless
clarification" of the emissions scandal. He admitted that he, too, did not
yet have the answer to many questions.
Muller was speaking at a works
meeting in Wolfsburg on October 6, 2015. He said that what had happened went
against everything the Group and its people stand for and that there was no
excuse. "We can and we will overcome this crisis, because Volkswagen is a
group with a strong foundation. And above all because we have the best automobile
team anyone could wish for," he
said, assuring the workers that the company would do everything it could to
ensure that Volkswagen continues to stand for good and secure jobs in the
future.
The recently appointed CEO of
Volkswagen Group who replaced Dr Winterkorn was speaking to more than 20,000
employees at the Wolfsburg plant. "Apart from the enormous financial
damage which it is still not possible to quantify as of today, this crisis is
first and foremost a crisis of confidence. That is because it is about the very
core of our company and our identity: it is about our vehicles," he said.
"Our most important task
will therefore be to win back the trust we have lost – with our customers,
partners, investors and the general public. Only when everything has been put
on the table, when no single stone has been left unturned, only then will
people begin to trust us again," Müller said.
The CEO asked employees for
their understanding, saying that he, too, did not yet have the answer to many
questions. "Believe me – like you, I am impatient. But in this situation,
where we are dealing with four brands and many model variants, care is even
more important than speed," he said.
Nevertheless, he announced
that a project team had drawn up an action plan. Over the coming days, the
customers affected would be informed that the emissions characteristics of
their vehicles would be upgraded. Furthermore, the company has set up websites
where customers can check whether their vehicles are affected by entering the
chassis number. The company will shortly be presenting the technical solutions
to the responsible authorities – in particular the German Federal Motor
Transport Authority (KBA) – for approval. Müller said, "In many instances
a software update will be sufficient. Some vehicles, however, will also require
hardware modifications. We will keep our customers constantly informed about
the measures and arrange workshop appointments."
The Group CEO also emphasised
that all of the vehicles in question are technically safe and roadworthy. "At
no time was the safety of our customers compromised. And above all: all EU6
diesel vehicles comply with legal specifications and environmental
requirements. For Wolfsburg, that means production can continue," he
noted.
On the other hand, Müller did
not omit mentioning that "while the technical solutions to these problems
are imminent, it is not possible to quantify the commercial and financial
implications at present." He added that the company must now respond
swiftly: "That is why we have initiated a further critical review of all
planned investments. Anything that is not absolutely necessary will be
cancelled or postponed. And it is why we will be intensifying the efficiency
program. To be perfectly frank: this will not be a painless process."
However, he also gave employees reassurance: "We will do everything we can
to ensure that Volkswagen continues to stand for good and secure jobs in the
future."
Müller added: "At the IAA
we demonstrated that the Volkswagen Group is well positioned when it comes to
the key technologies of the future. We cannot afford to jeopardize this strong
position now. We must make massive savings to manage the consequences of this
crisis. At the same time, though, we cannot afford to economise on the future.
That is something else we will also be addressing over the coming weeks and
months."
Müller pointed out that not
all the facts were on the table yet. One conclusion, however, was already
clear: "Volkswagen must once again stand for more integrity. Not just on
paper. But anytime, anywhere. We will make every effort to make very sure that
the rules are respected by everyone. This Group and its brands stand for
sustainability, for responsibility, for credibility. At the moment, much of
that seems to have been deeply shaken. But: together with you, I am determined
to prove that our values remain our guide. And that Volkswagen, that each one
of us, deserves the trust of people everywhere."