Volk­swa­gen’s top US ex­ec­u­tive steps down amid probe

The Pak Banker - - COMPANIES/BOSS -

Volk­swa­gen AG's top U.S. ex­ec­u­tive is step­ping down nearly six months af­ter the Ger­man au­tomaker ad­mit­ted to in­stalling soft­ware to al­low 580,000 diesel U.S. ve­hi­cles to emit ex­cess emis­sions, the com­pany said on Wed­nes­day.

Michael Horn, who has been pres­i­dent and chief ex­ec­u­tive of­fi­cer of Volk­swa­gen Group of Amer­ica since 2014, is leav­ing by mu­tual agree­ment "to pur­sue other op­por­tu­ni­ties ef­fec­tive im­me­di­ately," VW said. Horn, 54, could not im­me­di­ately be reached. A lawyer for Horn did not im­me­di­ately re­turn a call seek­ing com­ment.

The Ger­man au­tomaker said on an in­terim ba­sis, Hin­rich J. Woe­bcken, a for­mer BMW ex­ec­u­tive who ran global pur­chas­ing among other jobs, is fill­ing Horn's job. In Jan­uary, VW named Woe­bcken as head of VW's North Amer­i­can re­gion, ef­fec­tive April 1.

Horn sent an email to em­ploy­ees thank­ing them for sup­port­ing him and for pulling to­gether dur­ing the cri­sis. Horn's de­par­ture comes as VW con­tin­ues to ne­go­ti­ate with Cal­i­for­nia, the Jus­tice Depart­ment and En­vi­ron­men­tal Pro­tec­tion Agency on pos­si­ble fixes or buy­backs for the diesel ve­hi­cles that emit up to 40 times legally al­low­able pol­lu­tion. It faces a March 24 dead­line to tell a fed­eral judge whether it has an ac­cept­able fix.

A top Cal­i­for­nia of­fi­cial told state law­mak­ers Tues­day that VW may only be able to mount a par­tial fix and may have to pay to mit­i­gate the harm caused by al­low­ing ve­hi­cles to re­main on the road.

Volk­swa­gen faces an on­go­ing Jus­tice Depart­ment crim­i­nal in­ves­ti­ga­tion. The Jus­tice Depart­ment sued VW in Jan­uary seek­ing up to $46 bil­lion for vi­o­lat­ing en­vi­ron­men­tal reg­u­la­tions and sent VW a civil subpoena un­der a bank fraud law.

Alan Brown, gen­eral man­ager of Hen­drick Volk­swa­gen in Frisco, Texas who is pres­i­dent of the Na­tional Volk­swa­gen Dealer Ad­vi­sory Coun­cil, praised Horn's ten­ure at VW and said he had talked to Horn over the last three days about his de­par­ture. Brown told Reuters Horn had been of­fered other jobs at Volk­swa­gen out­side the United States, but de­clined to take them.

Brown said it was crit­i­cal VW main­tain the strat­egy of grow­ing U.S. vol­ume and noted deal­ers have strongly sup­ported the au­tomaker through the cri­sis. "We are not work­ing out of gas sta­tions any more," Brown said, not­ing VW's about U.S. 650 deal­ers have in­vested $1 bil­lion over the last decade in fa­cil­i­ties.

Brown is fly­ing to Ger­many on Sun­day and stay­ing through Wed­nes­day for meet­ings with VW ex­ec­u­tives in the af­ter­math of Horn's de­par­ture. The VW dealer coun­cil in a state­ment called Horn's de­par­ture "a se­ri­ous blow to the U.S. dealer net­work, the em­ploy­ees of Volk­swa­gen of Amer­ica, the work­ers at the Volk­swa­gen plant in Chat­tanooga, and the en­tire Volk­swa­gen com­mu­nity." It added that the "change in man­age­ment can only serve to put the com­pany at more risk, not less."

VW brand U.S. sales are down 14 per­cent this year af­ter fall­ing 5 per­cent last year. VW still faces a stop sale on all new diesel ve­hi­cles.

Brown said it was im­por­tant VW stick with the busi­ness plan it ap­proved to ex­pand U.S. sales by quickly re­fresh­ing and re­design­ing ve­hi­cles.

U.S. VW deal­ers "don't want a hand­out. They want a chance to win," Brown said. He said VW should scrap the idea of po­si­tion­ing it­self as a "near pre­mium brand" and re­turn to its roots in the 1960s of sell­ing mass mar­ket ve­hi­cles like the iconic Bee­tle.

Den­nis Gaudet, a New Hamp­shire VW dealer, said Horn was "prob­a­bly the most pop­u­lar (head) we've had as long as I've been a dealer" and added he knew the Amer­i­can mar­ket "bet­ter than most."

Dur­ing the ini­tial re­sponse to the cri­sis, Horn was VW's pub­lic face in the United States, apol­o­giz­ing days af­ter the scan­dal be­came pub­lic and tes­ti­fy­ing be­fore Congress.

"Let's be clear about this: our com­pany was dis­hon­est - with the EPA and the Cal­i­for­nia Air Re­sources Board - and with all of you. And in my Ger­man words: We to­tally screwed up. We must fix those cars," Horn said on Sept. 21.

In Oc­to­ber, Horn told a U.S. House of Rep­re­sen­ta­tives panel that VW's su­per­vi­sory board and top lead­er­ship did not in­ten­tion­ally or­der the cheat­ing, but said it was the work of a few in­di­vid­u­als.

Horn told Congress he had no knowl­edge of the cheat­ing. Horn joined VW in 1990 and held a se­ries of jobs, in­clud­ing VW sales for Europe, be­fore he be­came CEO based at VW's U.S. head­quar­ters in Herndon, Vir­ginia fol­low­ing the res­ig­na­tion of his pre­de­ces­sor, Jonathan Brown­ing who abruptly re­signed af­ter VW brand sales fell in 2013. Sales fell de­spite an ag­gres­sive plan an­nounced in 2008 by VW to triple sales in 10 years.

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