Volkswagen plans to oust CEO after emissions scandal
FRANKFURT, Germany — Volkswagen is set to oust CEO Matthias Mueller as it grapples with a diesel emissions scandal that has cost it billions of dollars, led to the imprisonment of two executives and scarred the German carmaker’s reputation.
Herbert Diess, who is in charge of the company’s flagship Volkswagen brand, is expected to succeed Mueller, according to two people with knowledge of the internal discussions. The company said Tuesday that it is considering a leadership change, and a final decision is expected by the end of the week.
While there was no obvious trigger for Mueller’s departure at this moment, his efforts to lead the company beyond the 2015 emissions cheating scandal have stalled.
The repercussions of the wrongdoing have continued to multiply, tainting not only Volkswagen but also rivals BMW and Daimler just as they are dealing with an industrywide shift toward electric and self-driving vehicles. Political leaders are pressing the German carmakers to compensate diesel owners who bought cars that turned out to be dirtier than advertised, which could add to the already astronomical cost of the scandal.
Word of Mueller’s expected departure came only days after Deutsche Bank, Germany’s largest lender, fired CEO John Cryan amid chronic losses. The boardroom turmoil at two of the country’s most prominent companies is symptomatic of the clouds that are beginning to gather around the German economy. While unemployment is at record lows, other recent indicators have pointed to slower growth, including falling industrial production.
Mueller, 64, took over Volkswagen amid the worst crisis in its postwar history, days after it admitted in September 2015 that it had cheated on diesel emissions tests, installing illegal software in 11 million vehicles.
He succeeded in preventing a collapse of sales and profit. But Mueller, who has spent his entire career at Volkswagen or its subsidiaries, struggled to deliver on his promises to remake the company’s insular culture. The carmaker continued to suffer blows to its reputation, including revelations in January that it had financed tests on monkeys in a bungled attempt to show that diesel exhaust was not as dangerous as it once was.
Diess, 59, carries less baggage than Mueller because he arrived at Volkswagen only a few months before the diesel scandal erupted. And Diess has led Volkswagen’s push to mass-produce electric cars, which are seen as essential to the company’s ability to defend itself against challengers such as Tesla, Uber and Google that are trying to remake the auto industry.
“This is a chance for Volkswagen to make a change,” said Christian Strenger, former head of Deutsche Bank’s wealth management division, who is suing Volkswagen because he said it violated its duty to shareholders by failing to be forthcoming about the emissions scandal. But Strenger said that Diess would have to “have the guts to clean things up.”
Volkswagen is still the target of a wide-ranging criminal investigation that has included searches of Mueller’s offices. However, there has been no new information that would have prompted Mueller to leave now, said Klaus Ziehe, a spokesman for the prosecutors in Braunschweig who are conducting the inquiry.
German prosecutors have not charged anyone in the Volkswagen case, but they expect to complete their investigation this year. Two former Volkswagen executives, James Liang and Oliver Schmidt, are serving prison sentences in the United States after pleading guilty to charges including conspiracy to violate the Clean Air Act.
Mueller was a highranking executive involved in product development at the same time that the company was concocting the illegal software and installing it in vehicles. He also worked closely with some of the people under investigation over possible involvement in the emissions scandal. Mueller has insisted he was ignorant of any wrongdoing, but he has nonetheless faced the accusation that he was part of a system that allowed it to take place.
The challenges that Diess faces are considerable. Even now, the diesel scandal continues to corrode Volkswagen’s reputation.
In January, the New York Times reported that the company had helped to finance experiments in which monkeys were forced to breathe diesel fumes at a lab in Albuquerque. The exposure of the research caused a furor in Germany and beyond. Chancellor Angela Merkel condemned the experiments, the German Parliament debated possible consequences, and animal welfare activists demonstrated outside Volkswagen’s headquarters.
Volkswagen’s cheating has also had an effect on the wider industry. Diesel was once the most popular engine option in Europe because of its fuel economy. But diesel vehicle sales have been dropping since Volkswagen’s deception was uncovered.
The scandal exposed the degree to which virtually all of the European carmakers took advantage of regulatory loopholes to sell diesels that polluted far more in everyday use than in official tests, causing poor air quality that led to thousands of premature deaths. As a result, cities across Europe have taken steps to restrict the use of diesel vehicles in urban centers. German carmakers have suffered the most from the backlash because of their dependence on the technology.