Busy Friday for Volkswagen actions

Here is the latest news direct from Volkswagen at the end of the week when the biggest crisis for the company has exposed it to overwhelming criticism and great uncertainty about the real size of the problem globally. Their breeches of compliance and governance standards will make the news for some time yet and the possibility of this issue being an issue with other brands is a real possibility.

As you will see below, Volkswagen has acted swiftly to limit the damage to the company and brands with a new CEO, many changes in personnel and a number of management statements of intent to right the wrongs related to this deepening crisis.

CEO of VW Passenger Cars brand, says: “We are working at full speed on a solution.”

In the press release dated last Tuesday (September 22), the Volkswagen Group announced that Volkswagen Group vehicles worldwide are affected by the current issues regarding emissions.

The internal evaluation revealed that approximately five million Volkswagen Passenger Cars brand vehicles are affected worldwide. 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.

Now, 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.

Latest statement by the Supervisory Board of Volkswagen AG

The Volkswagen Supervisory Board consulted intensively on the current situation at its meeting today. There is absolutely no excuse for the manipulations which have deeply shocked Volkswagen. The company will leave no stone unturned in getting to the bottom of this, will call those responsible to account, and take the necessary actions. The first consequences in this regard were agreed upon at today’s meeting:
1.   The Supervisory Board has authorized the Chairman to mandate German and US lawyers to objectively investigate and fully clarify the manipulation of emissions data of diesel engines.

2.   The Executive Committee of the Supervisory Board will be charged with coordinating and safeguarding all necessary steps to monitor clarification until such time as a proposed committee commences its work.

3.   With the information currently available the Supervisory Board recommended the immediate suspension of some employees. This process is already underway.

4.   Matthias Müller will lead the Volkswagen Group going forward as the new CEO of Volkswagen AG. He is what the company needs now. Matthias Müller is exactly the right man at the right time to make a fresh start and to drive clarification of the current crisis that has hit our company with decisiveness and to draw the right conclusions. We expressly value his critical and constructive approach.

5.   The Supervisory Board resolved to propose to the Extraordinary Meeting of Shareholders on November 9, 2015 to elect Mr.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 behavior of engineers and technicians involved in engine development shocked Volkswagen just as much as it shocked the public.We can only apologize 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.

Matthias Muller appointed CEO of the Volkswagen Group

Matthias Müller (62) has been appointed CEO of Volkswagen AG with immediate effect. This was decided by the Supervisory Board at its meeting in Wolfsburg today (Friday). Müller is currently Chairman of Porsche AG in Stuttgart. He will continue in this function until a successor has been found.

The interim Chairman of the Supervisory Board of Volkswagen AG, Berthold Huber, underscored: “Matthias Müller is a person of great strategic, entrepreneurial and social competence. He knows the Group andits brands well and can immediately engage in his new task with full energy. We expressly value hiscritical and constructive approach.”

Bernd Osterloh,Chairman of the Group Works Council, commented: “When it comes to leadership appointments the Volkswagen Group does not need hasty decisions. We know and value Matthias Müller for his determination and decisiveness. He does not work on his own, rather he is a team player.That is what Volkswagen needs now.”

Matthias Müllersaid:“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 andabove all its competentand highly motivated team has the opportunity to emerge from this crisis stronger than before.”

Matthias Müller was born in Chemnitz (Saxony) on June 9, 1953. He completed his high school education in Ingolstadt followed by an apprenticeship as a toolmaker with AUDI AG. He then studied computer science at Munich University of Applied Sciences. After obtaining his master’s degree in computer science, Müller resumed his career with AUDI AG in Ingolstadt in 1978, becoming Head of the Systems Analysis Division in 1984 and Head of Project Management for the Audi A3 in 1993. He assumed responsibility for Product Management at Audi AG, SEAT and Lamborghini in 1995.

Müller moved to Wolfsburg as Head of Product Management of the Volkswagen Group and the Volkswagen brand in 2007 and also became a General Representative of the Volkswagen Group. He has been Chairman of the Executive Board of Dr.Ing. h.c. F. Porsche AG and a member of the Executive Board of Porsche Automobil Holding SE since 2010. In his function as Chairman of the Executive Board of Dr. Ing. h.c. F. Porsche AG, Müller was appointed member of the Board of Management of Volkswagen AG effective March 1, 2015.

Matthias Müller’s current contract as a Board member of Volkswagen AG will continue to apply in his new function as CEO. This contract runs until the end of February 2020.

Volkswagen Group Restructuring:
Supervisory Board passes resolutions for new organization

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 today (Friday) in Wolfsburg. 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.”

A number of key management personnel changes become effective from October 1.

Reorganization of the North America region /Successor Prof. Vahland
The Supervisory Board decided on there organization 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 standardized 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; organizational units, for example for Group product strategy, new business fields, cooperations and holdings, connectedcar 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 emphasized 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.