It is hard to comprehend how VW reached this point. But the question is how it will regain the trust and what are the long term effects for the company and for the automotive industry.
The facts are clear. Volkswagen cheated at the emissions controls for 11 million diesel cars sold all over the world. It is nothing hard in understanding this other than the gigantic dimension of the scandal and why VW has allowed to escalate so high. Experts are pointing out to the mighty leadership duo of former CEO Martin Winterkorn and ex-Chairman Ferdinand Piech, whose influence lasted more than two decades. Even if they are no longer part of the company, they left as legacy a rigid corporate structure and an atmosphere of obedience. The only way to move forward is to leave the past behind and Matthias Mueller, the new CEO, believes exactly so: “Structures only are of value when they ‘live and breathe’ so I can only repeat (…) we need to reform our culture and leadership philosophy”, said Mueller during a meeting of high-ranking managers in Leipzig, Germany. “Personally I would wish for a new culture of openness and cooperation but I cannot make this an order.” Mueller has said only a few people in Wolfsburg knew about the deception, although even the US chief, Michael Horn, admitted he had difficulty believing that.
The scandal is expected to cost Volkswagen more than they bargained for, tens of billions of euros. When investors finally learned about VW’s dirty little secret, its market value collapsed by a quarter. Nordea Asset Management, the Nordic region’s largest retail fund provider with 174 billion euros in assets under management, has put its VW holdings under quarantine and refuses to invest more in the company’s stocks or bonds.
Christian Strenger – corporate governance and oversight expert who is on the boards of German corporations Tui, Fraport and Evonik – thinks three things need to be done to salvage some of VW’s credibility: a comprehensive investigation in which the findings are confirmed by neutral experts, top executives to serve as role models within a new corporate culture and “a considerable change in the supervisory board to serve as a convincing counterweight to the large shareholders and unions that so far have proved hapless in this issue”. The damage is done and it’s hard to predict at this point all the future implications of the scandal. More than that, other ramifications and new disclosures are occurring every day.
Via Automotive News Europe