Running The Gauntlet For VW Boss Müller

2023 Author: Eric Donovan | [email protected]. Last modified: 2023-08-25 09:36

Matthias Müller is going to have a tough week. In addition to the appearance at the Auto Show in Detroit, the VW boss also meets with the head of the EPA.

First the wrong cars and then a banned software: America's largest auto show in Detroit has long been a hot spot for Volkswagen because business in the USA is not going well due to a lack of suitable models. But it was never as bad as it is now. Because the United States is the epicenter of the emissions affair that plunged VW into the deepest crisis in its history.

VW boss Müller on Wednesday at the EPA

In the middle of the diesel debacle, CEO Matthias Müller now has to go to the lion's den for the industry show. On Wednesday he will also meet in Washington with Gina McCarthy, the head of the US environmental agency EPA. It shouldn't be a pleasure for Müller.

The US has sued Germany's largest corporation for fraud and violations of environmental laws. That was foreseeable, VW has already admitted the use of the illegal emissions software. But the government also accuses the Wolfsburgers of cheating in dealing with the affair and of trying to mislead the authorities.

On Monday in Detroit

On top of that, the “Süddeutsche Zeitung” reported another horror scenario: VW feared having to buy back 115,000 diesel cars under pressure from the US authorities, the paper wrote on Thursday. That would cause billions in new costs. The group leaves the report uncommented.

The problem threatens to become a wildfire, Müller has to extinguish. He has a suitable setting: of all places, he will make his first appearance in the US as the successor to Martin Winterkorn in the former fire station in the “Motor City”. On Monday night he speaks to journalists there. Winterkorn also recently celebrated the start of the trade fair in the brick building - always following the motto: "It'll be fine."

VW is behind in the USA

In the USA, the world's largest car market after China, the Wolfsburg-based company has only met the taste of customers to a limited extent for a long time. The competition drives them away. Group works council chief Bernd Osterloh already openly called the US business a “disaster event”.

Even the car dwarf Subaru sells more there. An SUV offensive, which will bring a seven-seater thick ship from the end of 2016, should remedy the situation. VW builds this at its US plant in Chattanooga, Tennessee. The car is huge by German standards and medium-sized for the USA.

Audi and Porsche break records

The emissions scandal is now bursting into the catch-up plans. Unlike at home, where the recalls of the affected diesel vehicles will soon begin, the consequences of the affair for VW in the USA are still largely unclear.

While the subsidiaries Audi and Porsche collect records, the core brand is behind. In 2015, VW sold only 349,000 cars in the US, mostly Jetta and Passat. That is five percent below the previous year's figure and is miles away from the goal of selling around 800,000 cars by 2018. The stamp still comes from Winterkorn and has not yet been collected.

Emissions affair slows VW growth

Some experts see black for VW. Ferdinand Dudenhöffer from the University of Duisburg-Essen says: “The group is definitely looking for a new America strategy. He should think about taking VW cars off the market there and looking for success with other brands, such as Skoda."

Until the diesel scandal, the USA had played a key role in Volkswagen's goal of becoming the world's largest carmaker by 2018, ahead of Toyota. The main reasons for the US weakness, in addition to gaps in the range, are also a lack of understanding of customer requirements. So the cycle for a cosmetic revision of the models (facelifts) got too long. Volkswagen's US boss Michael Horn said in Detroit a year ago: "We have to be faster." Now the emissions affair is slowing down.

High hopes for the VW Crossblue

In Chattanooga, great hopes are set for the seven-seater off-road sedan - working title CrossBlue. The home of the factory in the southern states quickly became prudent when the diesel scandal began. Just weeks after the outbreak, Volkswagen reiterated it will invest $ 600 million and create 2,000 new jobs as planned.

"The United States of America continues to be one of the most important markets for Volkswagen," said US boss Horn. He probably meant that in perspective. In any case, hopes for a turnaround hang more than ever on the new SUV model from Chattanooga. Karl Brauer from US industry analyst KBB calls the CrossBlue an “all-or-nothing product” for Volkswagen in the USA.

Sales of the US Passat collapse

Since Winterkorn took office in 2007, the group had not shown its US balance sheet separately. Financial analysts like Frank Schwope from NordLB believe they know why: "Over the past ten years the results of the core car brand in the USA have been in the red for the most part." And the exhaust gas dilemma is unlikely to change that in the foreseeable future. "I can hardly imagine that the brand was in the black in the USA in 2015."

In Chattanooga, the city leaders were once so proud of VW that they donated the “Volkswagen Chattanooga” logo on the huge factory roof for $ 266,000, as the local “Times Free Press” reported. Today the headlines are different.

The sale of the US Passat built in Chattanoogacollapsed in December by more than half, for the year as a whole the minus is a fifth. The paper is now wondering whether the problems could potentially jeopardize jobs in the factory. (dpa)