VW Appoints Mueller CEO, But Radical Action Will Have To Wait.
“A smarter choice would have been an outsider just to deal with this type of crisis”
Volkswagen has a new CEO, but anyone expecting radical changes at Europe’s biggest car company following the EPA diesel deception crisis would have been disappointed, at least in the short term.
Give the existential nature of the crisis facing VW, an outsider with clean hands might have been recruited, along the lines of Alan Mullaly who joined Ford from Boeing when it faced a crisis in 2006. Owners of diesel cars in the U.S. also might have expected some expression of solidarity from VW, while those expecting heads to roll were also disappointed.
VW appointed Matthias Mueller, currently CEO of VW subsidiary Porsche, to replace Martin Winterkorn who resigned as CEO Wednesday. Winterkorn quit in the wake of the company’s admission that it cheated U.S. emissions tests.
Mueller was the favourite to take on the job, followed by Herbert Diess, a former BMW executive who took over as VW brand chief in July.
Max Zanan, CEO of automotive dealership consultants IDDS Group, wasn’t impressed with the appointment of Mueller.
“A smarter choice would have been an outsider just to deal with this type of crisis. I’m sure Mr Mueller is an outstanding manager and chief executive but in this delicate situation VW might have looked outside for a new CEO,” Zanan said.
“Look at Ford when it was in dire straits, a life or death situation. It decided to take a chance and hire Alan Mulally from Boeing even though he was an auto industry outsider. He was brought in to change management and culture and Ford is now doing very well. VW could have done something similar,” Zanan said.
Zanan said VW needs to something radical to restore U.S. consumers faith.
“VW should step up to the plate and buy those cars back,” Zana said.
About 500,000 VW diesel cars in the U.S. were implicated in the EPA scandal.
This echoed a plea earlier from Bernstein Research analyst Max Warburton, who favored Diess for the CEO job. He had these suggestions for the new CEO –
- Offer to buy back and scrap every 2.0 diesel sold in the U.S. – all 482,000 of them – cost $6 billion.
- Announce that VW will henceforth abandon all efforts to sell diesel engines in the U.S., but will embrace gasoline and plug-in hybrids.
- Send the new CEO to the U.S. Monday to meet government officials, the EPA and media.
- Announce the immediate suspension of the 100 engineers most closely linked with the engine and software development.
- Announce the cessation of all motorsport activities immediately, turning all the funding over the electric, plug-in hybrid and environmental research in a new research facility located in the U.S. employing U.S engineers.
Zanan also said VW should stop selling diesel cars globally, and rechannel those resources into developing electric cars and plug-in hybrids.
Zanan, who said he does business with VW dealerships, said they are in an unfortunate position now in the U.S., being bombarded with phone calls from irate VW owners who want to return these cars.
In Europe, the Mueller appointment appeared to lack radical impact. Because of the arcane nature of VW’s corporate governance, the new CEO must be acceptable to the unions, who control half the votes on the 20-member supervisory board. There is also a perception that nothing really has changed, given that although Ferdinand Piech is no longer board chairman, because of his financial control he will still be able to call the shots from behind the scenes.