Switzerland may ban Volkswagen diesel car sales

28 Sep 2015 | Author: | No comments yet »

Insider Named to Head Volkswagen Shows Germany Inc. Insularity.

A 2007 letter from the parts firm warned against deploying the software, according to an internal VW investigation seen by the German newspaper ‘Bild am Sonntag’.Volkswagen’s big push in the United States revolved around making Americans love driving a diesel car again — a challenging task given the poor image diesel had endured since the 1980s.Matthias Mueller pressed the Volkswagen AG board to move ahead with a reorganization he helped devise before the carmaker was caught up in an emissions-cheating scandal, as the new leader seeks to put his stamp on the company.After early positions at Audi, the outgoing and incoming Volkswagen AG chief executive officers spent the next 20 years hopping between development roles in the carmaker’s 600,000-employee empire.

DETROIT (AP) — Volkswagen faces daunting challenges in fixing software that enables cheating on diesel engine emissions tests, a task that’s becoming more urgent because of growing anger from customers. Fuelling speculation other carmakers were also using the technology, Bosch said: “We supply components for exhaust after-treatment to several manufacturers. Its answer was a 2-liter, 4-cylinder turbo-diesel engine that could run seemingly forever on a single tank while offering great acceleration and meeting even the most stringent environmental standards. The former Porsche boss wanted the new strategy to remain on the agenda of the Friday meeting in Wolfsburg, Germany, according to a person familiar with Mueller’s thinking, who asked not to be identified because the discussions were private.

The integration is the responsibility of the manufacturer.” Volkswagen could face trouble funding leasing deals on new cars as the European Central Bank declined to comment on claims it has put a temporary ban on buying the loans that finance sales of VW cars. The supervisory board of the troubled parent company Friday named Mueller to replace Winterkorn, who stepped down two days previously amid a widening scandal over rigging emission-test results. But experts say it’s likely to cost much more as VW tries to comply with U.S. clean air regulations while appeasing diesel owners who paid extra for the cars, thinking they could help the environment without sacrificing performance. “We understand that owners of the cars affected by the emissions compliance issues are upset,” VW said on a consumer website launched Sunday.

Fresh allegations emerged that the UK Government was warned in 2009 by Transport Research Laboratories, a government consultancy, of serious discrepancies between on-road emissions and the results of lab tests. That someone with such a similar background was picked to clean up the mess shows the insularity and clannishness of Germany’s corporate governance structure, said Charles Elson, director of the University of Delaware’s Weinberg Center for Corporate Governance. “I’m not surprised they went with an insider,” he said. “The company may say ‘Who else can take charge?’ and that’s a fair point. Separately, the Frankfurter Allgemeine Sonntagszeitung reported that a Volkswagen technician raised concerns about illegal practices in connection with emissions levels in 2011.

To deliver its point, Volkswagen has spent $77 million this year to promote its diesel cars, often in a humorous way, a figure that represents about 45 percent of its total for television ad spending of about $165 million, according to the measurement firm iSpot.tv. Volkswagen said Friday that more authority will be given to individual brands and regions, a departure from the centralized structures that kept key decisions in Wolfsburg and the chief executive officer’s inner circle.

In one, they argue about the car’s smell. (It turns out that it comes from the dog, not the diesel.) In another, they disagree about whether the engine is turned off. (It’s on.) In a third, one of the women asks, “How do you like my new car?” Another jumps in with, “Isn’t diesel dirty?” The first woman ends up holding a white scarf under the tailpipe to show how clean the emissions are. Berthold Huber, interim chairman of the company’s supervisory board, said in a statement that Mueller is “a person of great strategic, entrepreneurial and social competence. But experts said VW will have to strike a careful balance to appease government regulators, make customers happy and avoid emptying the company cash box. Vauxhall said: “We do not have ‘defeat devices’ in our vehicles.” VW has been reeling for more than a week since US regulators found its diesel engines were emitting up to 40 times the amount of nitrogen oxides than standards allow. He knows the Group and its brands well and can immediately engage in his new task with full energy.” Mueller was picked by the company’s 20-member supervisory board, 17 of them German or Austrian.

The Vehicle Certification Agency, which oversees the testing of vehicles in Britain, is also investigating whether other manufacturers have manipulated the testing system. The ads’ mantra of clean diesel that combines high performance with high efficiency came with a bonus for prospective car buyers: The cars were also relatively affordable. Friday’s meeting, which took place in a newly constructed office building within Volkswagen’s main plant, started before noon and stretched into the evening amid wrangling over who knew what and when. A more expensive fix that adds a treatment system wouldn’t hurt performance, but it would cost thousands per car and by one analyst’s estimate, could total more than $20 billion including vehicles in the U.S. and Europe.

This will take several weeks.” Italian media reported on Sunday that Volkswagen’s Italian unit has sent a letter to all of its dealers to stop selling cars that have the affected diesel engine. Diesel motorists are likely to see their fuel bills go up as cars consume up to 5pc more fuel per mile when their pollution control systems are operating properly. For about $30,000, consumers could get a Jetta or Golf 2-liter TDI engine that can be driven 600 miles on a tank of gas and still meet stringent emissions standards.

Owners of cars containing “defeat devices” have been benefiting from lower fuel consumption but emitting air pollutants far in excess of the legal limit. Boards at most big German companies are predominantly male and lag behind companies in countries such as the U.K. and Sweden, which don’t have quotas for women, as well as Norway, which does. The British Department for Transport is likely to re-test hundreds of models for emissions, prompting fears up to 1.5 million UK owners could be hit with backdated demands of up to €700 a year going back to 2012. Environmental Protection Agency and the California Air Resources Board accused VW of installing secret software on 2-liter four-cylinder diesel engines that turned on pollution controls for lab tests and shut them off during real-world driving.

Now, the company that famously introduced the original Beetle as a “Lemon” and urged consumers to “Think Small” faces a public relations crisis, and a major challenge to restore its image. “It is one thing to make a mistake, it’s another to intentionally trick your customers,” said Sara Roen Brady, a crisis reputation manager based in Florida. “This is a really emotional issue because it’s about the character of the company and the character of their customers. In addition to its lack of gender diversity, Germany’s corporate-governance system is held back by its cliqueishness, said Henrike von Platen, president of the Business and Professional Women advocacy group in Berlin. “If you meet someone on the board at one company, you happily take them with you to another one,” von Platen said. “Trying to break into that and improve diversity is tough.” Supervisory boards in Germany are supposed to act as a check on their management boards and look broadly when seeking top talent. While they’re changing, they still have plenty of directors who have overlapping business interests and they tend to choose insiders for the CEO spot. At VW and other German companies, supervisory boards are comprised equally of shareholder and employee representatives, though the chairman, usually from the shareholder side, votes in the event of a tie.

With the pollution controls on, the cars are less efficient and won’t accelerate as fast, the two main reasons why people bought the VW diesels, said Matt DeLorenzo, managing editor and a diesel expert for Kelley Blue Book. The company claimed that the TDI models in its lineup offered up to 30 percent better fuel economy and up to 30 percent lower carbon dioxide emissions than comparable gasoline engines. But that would anger customers and likely would force VW to compensate them for the reduced mileage, just as Hyundai did when it got caught with inflated fuel economy estimates, DeLorenzo said. “If it’s really sluggish and doesn’t get out of its own way, that’s a bigger issue (to customers) than fuel economy,” DeLorenzo said. “People notice that big of a change in performance.” The other option is to add a diesel exhaust treatment system that’s used by other manufacturers and even by VW on larger diesel engines. Audi, part of the automotive group that includes the Volkswagen brand, targeted a bigger audience with its 2010 Super Bowl ad, drawing on a greener-than-thou image in a parallel world where overzealous “green police” hunt down environmental offenders who drink water out of plastic bottles, overheat their hot tubs or fail to compost properly.

German lawmakers earlier this year voted to require more than 100 of the largest listed companies to allocate 30 percent of vacant supervisory board positions to women starting next year. The scandal has reverberated across the globe, as authorities consider tighter regulation in the wake of irregularities on emissions affecting 11 million cars from the automaker’s VW, Skoda, Seat and Audi brands. In July, Volkswagen boasted that a Golf TDI set a record — as measured by Guinness World Records — by being driven more than 8,000 miles and getting an average of 81 miles a gallon.

VW probably tried to avoid urea systems in the beginning because their cost would have driven Jetta and Golf prices above competitors, especially gas-electric hybrids, DeLorenzo said. Volkswagen will create a North American group under Winfried Vahland, the head of the Skoda brand, in an effort to repair its reputation in a market where it has struggled for decades.

After Paul Achleitner, a former executive at Allianz SE and Goldman, Sachs & Co., was named chairman in 2012, the bank announced the promotion of Anshu Jain and Juergen Fitschen to co-chief executives. The Bentley and Bugatti marques will be grouped with Porsche, while Audi continues to manage the Lamborghini supercar division and Ducati motorcycles.

Eight of the 19 directors on the bank’s supervisory board have joined in the last three years, including two American women: former JP Morgan Chase CFO Dina Dublon and attorney Louise Parent. The board has played an active role, replacing Jain this summer with John Cryan and announcing that Fitschen will step down as co-CEO next year. “This shakeup at Deutsche Bank is among the first signals I’ve seen that a new form of corporate governance is taking hold in Germany,” said executive-search consultant Benson. Before the 2009 model year, U.S. diesel emissions standards weren’t as strict, so those cars likely passed the tests without a defeat device, DeLorenzo said.

Whenever the fix comes, it’s possible that owners might not get it done if it hurts their cars’ mileage and performance, and the EPA can’t force people to take their cars in for repairs. And the possibility of failing emissions inspections in states that require them apparently won’t be an issue because of the cheating software. “The defeat device was specifically designed to ensure that vehicles would pass inspection,” the agency says on its website. Winterkorn, 68, who had been due to get his contract extended on Friday before the widening scandal, had built a global champion that included subsidiaries ranging from Scania heavy trucks to Ducati motorbikes to Porsche sports cars. At the same time, key decisions were made at the Wolfsburg headquarters, and Winterkorn was known to get involved in the details, from design to engineering to operations.

While his path to the top of Volkswagen isn’t unlike Winterkorn’s — both men are company veterans and worked for years at the Audi unit — they have markedly different styles. Winterkorn was more patriarchal and could come off as gruff, with a growling voice and an imposing frame adding gravitas, while Mueller has a cooler and more cosmopolitan air and has said his management style is more inclusive. Stern-faced and unwilling to answer questions from journalists, Mueller still managed to offer a positive view of the week: the reform of decision-making and accountability could enable Volkswagen “to emerge from this crisis stronger than before,” he said.

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