Audi chief quits over VW emissions probe

VOLKSWAGEN’s (VW’s) attempts to contain the fallout from the emissions cheating suffered a setback after Audi, the group’s biggest profit centre, lost a key engineer tainted by the scandal.

Development chief Stefan Knirsch left the manufacturer with immediate effect this week after a probe showed he was aware of the manipulation when he took the job less than 10 months ago. A company veteran who started in Audi’s engine design unit in 1990, Knirsch was picked by Audi chief Rupert Stadler to succeed Ulrich Hackenberg, who was pushed out in the first round of management purges after the scandal broke a year ago. Now Stadler has come under increased scrutiny as investigators seek to untangle the origins of the scandal.

“We made it clear from the start that we don’t spare big names in the probe and will act if it becomes necessary,” Berthold Huber, deputy chairman of the unit’s supervisory board, said in a statement about Knirsch’s departure.

Audi did not comment on the reasons for the executive’s abrupt exit.

Audi is a linchpin in the Volkswagen structure. In addition to providing the biggest share of profit, it is an incubator for technology that filters down to the group’s mass-market brands and a proving ground for executives. Former CEO Martin Winterkorn ran Audi before being promoted to VW’s top job, following the same path as former chairman Ferdinand Piech. That close-knit relationship has raised questions about the responsibility for the cheating, and if Audi with its deep technology know-how played an integral role.

Audi has already been implicated in the emissions drama, albeit on a fairly marginal scale. Aside from the rigging of smaller VW diesel engines, US authorities targeted Audi for developing bigger motors that do not comply with diesel regulations. The manufacturer initially rejected the allegations before backtracking. Fixing that issue, encompassing about 85,000 vehicles, remains unresolved even after a settlement for the smaller cars.

Audi has become a focal point in the past week of media coverage tracing the scandal. A report in Der Spiegel linked Stadler to the crisis, and another alleged that some executives at the brand were aware of the cheating for almost a decade. The Audi CEO, who has run the brand for close to a decade and was part of Winterkorn’s inner circle, told the Rheinische Post newspaper this weekend he was helping the investigation

Stadler has been instrumental in raising the cachet of the brand, from an also-ran manufacturer in the 1980s to a car maker that aspired to take the luxury-car crown by the end of this decade. Audi’s range includes the compact A1 that is an upgrade from VW’s Golf, to the R8 supercar that shares parts with Lamborghini, the Italian sports-car maker owned by Audi.

The engine-control software at the heart of the cheating scandal dates back to the late 1990s when Audi engineers developed a feature to reduce noise from diesel engines, but at the same time elevated emissions. To determine who will be held accountable, investigators are trying to understand when VW engineers refined the code and turned it into a defeat device.

Amid a tight battle with its luxury-car rivals, Audi can ill afford the distraction of losing its second development chief in less than a year. With a lack of leadership, the brand threatens to lose a step in developing technology to woo new customers. Mercedes-Benz and BMW have both posted bigger gains in deliveries so far in 2016.

For the time being, much of the attention at Audi is on VW’s internal probe. Lawyers handling the investigation have spoken to company insiders who pointed fingers at Stadler, alleging the CEO knew about the engine manipulation since 2010, Der Spiegel reported on September 20.

The next day, Sueddeutsche Zeitung said the investigators had discovered e-mail correspondence dating back to 2007 from an Audi engineer, who had told a wider group of managers that complying with US nitrogen-oxide thresholds would not be entirely possible without cheating.

Stadler, who is also a member of the VW management board, was questioned on September 21 by lawyers from Jones Day, the law firm hired by the car maker to help investigate the cheating, people familiar with the matter said. Members of the supervisory board were briefed on the status of the investigation on Friday and for now, are satisfied with the explanation they received regarding Stadler’s role in the scandal, said the people, who asked not to be identified because the discussions were private.

On Friday, Audi opens a factory in San Jose Chiapa, Mexico that will produce an overhauled version of the Q5 sport utility vehicle.