Why VW’s ‘Update’ Failed to Deliver the Goods
Back in the 1980s, Germany’s biggest carmaker used to advertise its products with the slogan “If only everything in life were as reliable as a Volkswagen…” On Thursday it lived up to its own self-image, albeit not quite in the way that the public and the authorities in the U.S. and Europe might want.
The first formal news conference since Matthias Müller and Hans Dieter Pötsch took over as chief executive and chairman was a near-complete anti-climax. The two still refused to discuss who was responsible for hiding the true level of harmful emissions from its diesel vehicles, and were still unable to say when or how the half-million affected vehicles in the U.S. can be fixed.
In fairness, the two were on a hiding to nothing from the start. The external investigation that they asked lawyers Jones Day to perform (450 experts crunching over 100 terabytes of data, according to Pötsch) is still ongoing, and mustn’t be prejudiced. Moreover, the company is still talking to the Environmental Protection Agency and California Air Resource Board about how to fix the problem, so there is no point in VW saying anything on that score until it has their sign-off.
When it came to apportioning blame for the debacle that has wiped over $20 billion off the company’s value and dragged its name through the mud, Pötsch’s approach was the same as his predecessor’s (and Müller’s): isolate the wrongdoing to as few as possible, hide behind abstractions and distract attention with emphatic promises of thoroughness. He said three things had caused the scandal:
- “Individual wrongdoing and personal omissions by individual employees in a part of our company” (he said this related to “a relatively small number” of staff);
- “Weak spots in parts of our processes;”
- “An attitude of tolerance towards rule-breaking in some parts of the company.” (That’s as close as the man who was chief financial officer of VW for 12 years came to admitting any kind of collective guilt.)
The whole press conference was a curiously muted affair, with few, if any, of the journalists present showing much concern about VW’s role in generating a pollution problem that E.U. experts estimate is causing nearly 500,000 premature deaths a year. Maybe it’s because the German press corps is habitually deferential, or because the trade press in particular has relations with VW that it won’t want to jeopardise, but the nagging impression is that the press’s interest in the scandal is starting to flag.
That would be understandable, given recent news showing that fixing the cars will be cheaper and simpler than at first thought. A second scare, over inflated claims about fuel and environmental performance, has turned out to be largely a red herring. As for the commercial impact, Müller said he saw no reason to make any further downward revisions to the company’s sales target for this year, despite sharp drops in sales in Germany, the U.K. and U.S. in November. He also dismissed, emphatically, suggestions that the company would be forced to sell any of its brands to meet the cost of expected legal settlements.
Operationally, that appears to mean that the problem is pretty much solved, leaving only two real issues: the size of the legal settlements in the U.S., and the question of ultimate personal responsibility. The bigger the first, the harder it will be for Müller and Pötsch to keep to their strategy of narrowing the focus onto a small clique of wicked engineers.