Volkswagen chief hopes to shift gears in Detroit
In this Friday, Sept. 25, 2015, file photo, newly-appointed Volkswagen CEO Matthias Mueller smiles during a press statement after a meeting of Volkswagen’s supervisory board in Wolfsburg, Germany, after CEO Martin Winterkorn resigned amid an emissions scandal. The scandal was one of The Associated Press’ top stories in 2015. AP File Photo
WASHINGTON, United States—When the world’s leading carmakers unveil glitzy new models at the Detroit auto show next week, Volkswagen’s chief executive Matthias Mueller will be in town on a less glamorous mission.
In his first US visit since American regulators said VW cheated pollution tests, Mueller will apologize over a scandal that plunged the German auto giant into the deepest crisis of its history and could cost billions in fines, recalls and class-action lawsuits.
READ: Volkswagen shares slide after US government sues automaker
At a press conference last month, Mueller said he would apologize, but “also look forward with optimism and confidence.”
“Will I be kneeling down? I don’t think so,” he said.
Mistakes “will be investigated and we will make sure they will never happen again,” Mueller added, stressing that Volkswagen “will be realigned for a new and successful future, including in the United States.”
Volkswagen has captured just three percent of US auto sales and had been counting on a major expansion in the country to achieve its now-shelved goal of overtaking Toyota to become the world’s largest automaker.
Mueller will make an appearance at a media reception in Detroit on Sunday, but Volkswagen said no other public events are scheduled for the embattled chief executive.
“I think that there is certainly a Volkswagen apology tour going on at the auto shows,” Eric Lyman, vice president of industry insights at car-buying site TrueCar, told AFP.
“And since the Detroit auto show is really the pinnacle of the auto show circuit globally, I certainly would expect there will be some sort of reference made to the incident.”
US government sues
The VW group admits it installed emission-cheating software in around 11 million cars of its VW, Audi, SEAT and Skoda brands worldwide.
READ: Volkswagen admits 11 million cars have emissions cheating device
The so-called defeat devices were designed to turn on pollution controls when the car is undergoing testing, and turn them off when the car is back on the road, allowing it to spew out up to 40 times the legal limit of nitrogen oxide.
The affair severely damaged the image of Volkswagen, which is currently facing a host of different investigations in several countries.
On Monday, the US government sued the carmaker for installing defeat devices on nearly 600,000 of its VW, Audi and Porsche vehicles sold in America between 2009 and 2015.
The Justice Department did not name the specific overall penalty it was seeking, but the figure could run well above $20 billion, with some media reports suggesting fines as high as $90 billion.
Mueller, who was appointed head of Volkswagen after the scandal broke mid-September, told German weekly WirtschaftsWoche that it is too early to assess the costs, stressing that “every estimate would be too vague.”
He insisted his company did not engage in criminal behavior.
“Criminal means for me that people enrich themselves and deliberately harm somebody else. No one at our place has done that.”
Mueller also told WirtschaftsWoche that Volkswagen now faces 650 class-action suits of disgruntled customers in the US.
Sales hit
Volkswagen’s US sales dropped nine percent in December and were down five percent overall in 2015, but analysts cautioned that this was in large part because it stopped selling its diesel cars.
“We’re seeing Volkswagen sales not being great because they can’t sell a lot of their vehicles,” Jessica Caldwell, an analyst with the automotive website Edmunds.com, told AFP.
“The ones they can sell they are selling quicker than the industry average by a significant measure.”
Jack Nerad, an analyst with Kelley Blue Book, agreed that “this has not been a complete disaster” for VW.
“It’s probably shaken some Volkswagen fans’ faith in the brand, but others are probably saying, let’s see what the fix is and what they offer me and we can potentially move on from there.”
Mueller will fly from Detroit to Washington, where he will meet Environmental Protection Agency administrator Gina McCarthy.
The environmental regulator has voiced dissatisfaction over protracted recall discussions and said the meeting was requested by the German automaker.
Stricter anti-pollution regulations make it much harder for Volkswagen to come up with a technical fix in the United States than in Europe.
“If we don’t see this fix coming soon, then we would expect a secondary apology being that it’s taking so long, and I don’t think they want to get to the point where they have to apologize for two things at once,” TrueCar’s Lyman said.
German daily Sueddeutsche Zeitung reported that Volkswagen expects it will have to buy back some 115,000 cars from American customers while the rest of the vehicles will need major refits to comply with US emission laws.
