HOW to steer Volkswagen out of its deepening crisis? That will be the main question for Matthias Müller, appointed as the company’s new chief executive on September 25th to succeed Martin Winterkorn, who resigned two days earlier. The German car company’s supervisory board, meeting on September 25th, gave the job to one of the favourites thought likely to succeed Mr Winterkorn even before the emissions scandal erupted. But is Mr Müller, currently in charge at Porsche, VW’s sports-car division, the right man for the task?
He has a monumental job on his hands. Cheating tests for nitrogen oxide emissions for diesel-engined cars in America has left the firm’s reputation in pieces. It also threatens to drain its coffers. The cost of recalling the 482,000 vehicles involved, penalties imposed by American regulators and the potential for a vast pay-out to settle legal claims, looks bad enough. The firm has set aside €6.5 billion ($7.3 billion) to cover costs related to the scandal but may have to fork out far more as lawsuits stack up. And the scandal is spreading.
As the board met to install Mr Müller in the driving seat fresh allegations of chicanery emerged. VW had previously admitted that 11m vehicles worldwide had hidden software installed in them that could cheat the American testing system. Germany’s transport minister claimed that VW had rigged emission tests on 2.8m diesel cars in Germany. As regulators across Europe and around the world continue to probe the firm it seems likely that further misdeeds may be uncovered.
As well as changing its boss VW sacked several executives, including the head of its American operations. That may not be enough to pull it out of the mess. As Mr Müller is a VW insider and a German, his appointment too much like more of the same. Of all the big global carmakers VW is the least diverse. American and European carmakers, even the Japanese, call on an array of multinational talent at the top to serve their global consumer base.
VW, by contrast, is German and insular. This partly accounts for its lack of success in America, which prompted the company to push diesels there, and cheat emssions tests, to gain market share and realise an ambition to become the world’s largest carmaker. Without an American in a senior role in Wolfsburg VW has failed to fully understand the American market. And its parochialism may have contributed to an atmosphere in which decisions to cheat on emissions tests went unchallenged. An outsider might have made a better choice but even in a crisis VW has stuck with a tradition that has not served it well.