He didn’t quite promise “blood, toil, tears and sweat,” but Matthias Müller gave little doubt that that’s what lies ahead for Volkswagen AG (VLKPY) and its staff for the next couple of years.
At a meeting in one of the cavernous halls of VW’s home plant in Wolfsburg, the new VW CEO promised over 20,000 assembled workers that: “We can and will overcome this crisis, because Volkswagen is a concern with strength and substance. And above all because we have the best car team that one could wish for.”
The trouble, as Müller admitted, is that VW isn’t going to have the best investment budget that one could wish for over the next few years, something that could badly affect its competitiveness in an auto sector facing disruption from tech giants such as Apple Inc.(AAPL) and Google Inc. (GOOG).
“We’ll but putting all planned investments under review again,” the CEO said, warning that the final bill for the scandal can only be guessed at today. “What isn’t absolutely necessary will be cancelled or postponed…That won’t be without pain.”
Müller didn’t say anything more explicit about the ‘pain’ in terms of job cuts, the topic that was top of the list of concerns for his 20,000 listeners.
VW has already set aside 6.5 billion euros ($7.3 billion) to cover costs arising from the scandal, but the spread of legal action, both criminal and civil, from Harris County, Texas to Italy, France and Australia makes it look increasingly likely that more will be needed. It estimates its capital expenditure needs over the next five years at over 85 billion euros.
Many have questioned whether Müller, 63 years old and a career insider at the VW group, is the right man to clean house after the scandal, but after a hesitant start, he is starting to make what sound like the right noises. The company took out full-page ads in Germany’s newspapers at the weekend (the 25th anniversary of Germany’s reunification) to beg the forgiveness of it home client base. And at Tuesday’s meeting, he told staff that a complete and thorough investigation is “the only way to make people to trust us again.”
Müller didn’t say how long he expected it would take to get to the bottom of the scandal. The company has indicated that the recall action it is planning for the 11 million affected vehicles worldwide–covering four brands and multiple models–will take months.
Müller’s comments come two days before Michael Horn, who heads VW’s U.S. operations, is due to appear before members of the Energy and Commerce Committee of the House of Representatives, as well as a representative of the Environmental Protection Agency (EPA).
