New VW boss vows reform, ‘not revolution’ to overcome diesel scandal

Wolfsburg: Volkswagen’s new chief vowed Friday to push on with reform and cultural change to steer the German auto giant out of the cloud of the “dieselgate” scandal and into a future of electric cars and sustainable mobility.

“It’s about continued development, not a revolution,” said Herbert Diess, the 59-year-old Austrian who took over late Thursday from Matthias Mueller, 64, as CEO of one of the world’s largest automobile groups.

“We will emphatically address the special challenges that lie ahead of us, especially in electromobility, digitisation and new mobility services,” he told a press conference at the group’s Wolfsburg headquarters.

Diess promised to push on with “cultural change” in the company that suffered its deepest crisis when it had to admit in 2015 that it installed software in 11 million diesel vehicles worldwide to cheat on emissions test.

The crisis has so far cost the company more than 25 billion euros ($31 billion) in buybacks, fines and compensation as well as massive reputational damage.

The carmaker remains mired in legal woes abroad and in its home market, where it also faces possible diesel bans in some smog-clogged inner cities, a prospect that has already depressed resale prices to the chagrin of millions of owners of diesel vehicles.

“We lost a lot of trust, especially here in Germany but also worldwide,” Diess conceded, acknowledging that VW faced “a long road” toward winning back the confidence of consumers.

He stressed however that VW remains opposed to costly hardware fixes for its cars as well as to urban diesel bans.

A former executive with rival BMW, Diess joined VW only two months before the emissions cheating scandal broke in mid-2015 and is thus relatively untainted by the crisis.

He takes over the company as a new super manager, running both the group as a whole, with its 640,000 staff worldwide, and the flagship Volkswagen brand as well as the research and development and vehicle IT divisions.

‘Long to-do list’

While VW has defended its cherished diesel technology against the public backlash, it has also vowed to transform itself into a champion of greener cars in the medium term.

Diess’ predecessor Mueller had already steered the mammoth carmaker into a massive restructuring, aiming to offer electric versions of many of its models and streamline operations over the coming decade.

But Mueller himself landed in prosecutors’ sights over suspicions he may have known about the cheating before it became public and failed in his duty to inform investors.

“The new VW boss Diess has a long to-do list,” Greens party parliamentary leader Anton Hofreiter told German news agency DPA.

“He must finally clear up the diesel affair … Otherwise, the charge of secrecy and cronyism will keep sticking to VW in future.”

While Mueller brought VW’s share price and profits back up to pre-crisis levels, observers say he made little progress in shaking up the firm’s famously hierarchical and insular corporate culture, which some critics believe discouraged employees from speaking up about the diesel scam.

Diess, the relative newcomer to VW, promised that “we will continue to anchor integrity and compliance within the whole organisation”.

The change in CEO is part of a wider management shake-up for the VW Group whose 12 brands include Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT and Skoda.

The company said it would reorganise to group its units into volume, premium and super-premium segments as well as a China region portfolio to help it adapt “in a phase of highly dynamic change in the company and the entire automotive industry”.

It would also prepare its Truck & Bus division for a future stock market listing after 2018.

VW’s goal is “to safeguard its position among the leaders of the international automotive industry with innovativeness and profitability,” said supervisory board chairman Hans Dieter Poetsch.

“Herbert Diess is the right manager to do that,” Poetsch said, praising “the speed and rigour with which he can implement radical transformation processes”.