In a mea culpa press conference in Germany today, executives from the Volkswagen Group conceded areas of the company had a mindset “that tolerated breaches of rules,” one factor of several that led to the ongoing Dieselgate scandal.
Volkswagen AG’s Chairman of the Supervisory Board Hans Dieter Pötsch and CEO Matthias Müller conceded that the ongoing crisis—where diesel engines were found to circumvent emissions tests—occurred not just because engineers couldn’t figure out how to meet the U.S.’ tough emissions requirements, but also because the company’s corporate culture didn’t permit failure.
But while the executives gave updates on the recall and repair timeline for various European-market diesels, no details were announced on when and how the American TDI engines will be fixed. What they did announce instead was the latest results of the internal and external investigations into the diesel emissions cheating scandal that has sent the company into a tailspin.
While Volkswagen is building a case against those responsible for Dieselgate and claiming to make fundamental changes within the company at all levels, it also has no intention of selling any assets moving forward as it puts 20 new electric cars and hybrids on the market by 2020.
Müller is finally going to the United States to meet the authorities, but he won’t be kneeling down at the Detroit Auto Show while making his sincere apologies. VW is trying to speed up the American processes, the ball is in the EPA’s and the California Air Resources Board’s court at the moment.
VW employees are allowed to make mistakes from now on
This is a fundamental change. Since Volkswagen has lost the trust of many of its customers, workforce, investors, the politicians and the general public as well, the executives said the company is making changes to its corporate culture. The new direction should make their employees understand that mistakes are acceptable from now on, as long as they find a good solution as a team to solve the problem. Without cheating, that is.
Pötsch and Müller said the internal investigation revealed that in addition to individual failures, misunderstood customer interests and faults throughout their processes, the former attitude within the company to bend the rules if necessary to reach a goal within the given time led to the Dieselgate nightmare.
VW’s report blamed three things: misconduct of individuals, “weaknesses in some processes,” and a “mindset in some areas of the Company that tolerated breaches of rules.” From that statement:
It is clear that, in the past, deficiencies in processes have favored misconduct on the part of individuals. This is true, for example, for test and certification processes affecting our engine control devices, which were not suited to preventing use of the software in question. Group Audit has suggested specific remedies to correct this. We are concentrating on structuring these processes more transparently and systematically. For example, in the future, software for engine control devices will be developed more strictly in accordance with the 4-eyes principle. In addition, the bodies responsible for the release of such software are being reorganized.
While the internal audits will be finished by the end of this month, the law firm Jones Day is doing its own independent investigation going through emails and 102 TB of data partly gained from the laptops, mobile phones, sim cards and flash drives of 400 VW employees who may or may not be involved.
So far, they’ve completed 87 interviews and 9 managers got suspended, but it’ll be a while until VW’s 450 investigators build the case and find out exactly who were responsible at each level of the decision making process. While major figures like former CEO Martin Winterkorn and R&D boss Ulrich Hachenberg are out already, they should have all the concrete answers by April 21st.
Fixing those TDIs
Volkswagen dodged a bullet when it turned out that their gasoline emission problem is nowhere near as bad as they feared. Audi’s affected V6 diesels can also be easily fixed by getting a new catalytic converter.
But as far as the main problem, the 11 million EA189 four-cylinder engines, those 482,000 American customers won’t get a satisfying answer for quite a while. On the other hand, Volkswagen says its European models will all be fixed in a manageable time, since the 2.0 and the 1.2 version only need a software update, while the 1.6 has to be retrofitted with a new flow transformer, a simple solution that just wasn’t available back in the day. Recalls in Europe will be starting next month with the 2.0 TDI. The 1.2 will follow at the second quarter of 2016 while the 1.6 cars should all complete their trips to a VW dealer by the end of next year. Customers will be contacted directly by Volkswagen.
Currently, there’s no such deadline for the American cars, since U.S. regulations are tighter and that makes the fix a much bigger technical challenge. The company turned in its repair plan to the EPA and CARB, but the details of that plan have not been made public yet.
Defending the market position
Volkswagen wants its now rather decentralized management team, including all the seven new CEOs and the freshly appointed board members, to spend less time reading emails and sitting at meetings and focus on actual car projects instead. Less money will be spent on their airplane tickets as well as VW has to look after its money more than ever, the executives said.
Muller says VW should be “more Silicon Valley.” While they won’t be planning as far ahead as before after cutting a year from their development timeframe, by 2017 Volkswagen wants to present its strategy until 2025. Buyers can also expect 20 new electric or plug-in hybrid models from the VW Group by 2020. They also want to be the leaders in piloted driving.
After chopping up VW’s divisions into manageable chunks, Muller expects that the correct decisions will be taken at the correct level, while their tighter control system will make sure nothing similar can ever happen again.
VW will also do real life emission testing instead of the laboratory ones, because the difference between the results of the two are long past an acceptable level.
$$$
The Group cut 12 billion Euros for 2016, but Pötsch and Müller said their financial position is stable and the shares seem to be recovering as well. The American market remains important at both sides of the continent, and VW has no intention of selling any of its 12 brands either.
In regards of the conflict between VW’s new electric vibe and the upcoming Bugatti Chiron, Müller said the second generation will be profitable and as long as there’s such a huge demand for such a car, they will keep on selling them.
Photo credit: Getty Images and SpiedBilde
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