Surrounded by a slew of cameras and reporters, Volkswagen’s newly-appointed Chief Executive Officer, Matthias Müller, took the stage to present his upcoming plans for the Wolfsburg, Germany, corporation on Friday. Müller announced his desire to make Volkswagen “an even stronger company,” but has assumed the role amidst one of the brand’s largest scandals to date.
On September 22, the international automobile manufacturer issued a press release in which they stated that 11 million diesel units shipped worldwide contained software that drastically underreported the amount of pollutants emitted while running. The software has allowed vehicles to pass emissions testing despite releasing 40 times the allowable amount of greenhouse gases into the environment. Among the affected vehicles are the 2009–2015 Volkswagen Beetle, Jetta, and Golf, the 2014–2015 Volkswagen Passat, and the 2009–2015 Audi A3. As United States inspectors examined Volkswagen engines, the discrepancy between the amounts reported during computer emissions testing and the actual amounts of pollutants released became clear; former CEO Martin Winterkorn has stepped down in light of the events, and has assumed responsibility for the actions of the company.
The reputation-damaging misconduct has proven costly for the German corporation; due to expected fines and class action lawsuits, the manufacturer has announced that they have set aside $7.8 billion to cover settlements. As per the Clean Air Act, the federal government is entitled to fine the business $37,500 for each of the 482,000 units shipped within the U.S. However, whether or not U.S. legislators plan to incur the entirety of the fines is yet unclear. Since September 22, the group has encountered a nearly 35 percent drop in stock prices. Meanwhile, Volkswagen has temporarily suspended numerous employees pending investigation, with a planned restructuring of the North American branch of operations.
As the Obama administration began to tighten restrictions on emissions, many automobile manufacturers encountered strain in their efforts to develop new technologies—Volkswagen’s primary strategy for competition included the use of diesel engines in small automobiles. While diesel engines tend to achieve superior fuel economy compared to standard gasoline engines, they also emit greater amounts of smog-forming and lung-damaging nitrates during combustion. In late 2007, then-CEO Winterkorn announced plans to create new Volkswagen-branded pollution control technology; after internalizing the pollution control of the vehicles in the company’s fleet, the corporation took the opportunity to misreport their emissions during testing.
Legislators within the U.S. have informed consumers that they should expect much more rigorous road testing of vehicles to determine if manufacturers have employed software to cheat emissions testing. Meanwhile, Volkswagen itself has opted to hire an unnamed American law firm to conduct an internal investigation into the matter, and former CEO Winterkorn is currently facing inquiry.
Despite the unfortunate circumstances of his appointment, Müller has taken his new position in stride. “The same thing must never happen again,” Müller reassured consumers as he explained his plans for the restructuring of Volkswagen; changes to the management and decision making within the company are expected. While the company’s stock continues to tumble, Mueller is making a conscious effort to stand for the integrity of the brand.