Volkswagen Chief Executive Officer Matthias Müller and senior managers are steering the beleaguered car giant towards so-called Strategy 2025, its bid to revamp Europe’s largest carmaker over the next decade.
Mr. Müller, 63, announced a massive restructuring last week and set a goal of selling 2-3 million electric cars by 2025. This major shift came nine months after it emerged that VW had cheated emissions tests by installing special software in 11 million diesel engines around the world, a scandal that has cost the carmaker more than €16 billion and wiped off billions of its market value.
Investors and consumers have filed hundreds of lawsuits against the Wolfsburg-based carmaker in Europe and the United States, where VW violated clean air regulations because the manipulated diesel cars emitted more nitrogen oxide, a toxic gas which contributes to creating smog, than allowed. The investors want compensation for the lost value of their shares and cars.
On Tuesday, institutional investors, including a leading U.S. pension fund, the California State Teachers’ Retirement System, filed a new lawsuit against VW at a court in Braunschweig, a city close to VW’s headquarters in Wolfsburg. The investors demand €700 million, or $791 million, from the carmaker, claiming VW informed shareholders too late about the diesel emissions manipulation. The news came close on the heels of lawsuits filed by the Boston’s civil servant pension fund against the automaker in California.
On Monday, German prosecutors announced they were investigating the company and its former chief executive, Martin Winterkorn, for possible market manipulation, alleging VW failed to reveal the scandal soon enough to investors.
Speaking to Handelsblatt ahead of these developments, Mr. Müller, who took over from Mr. Winterkorn as CEO in September, explained how the carmaker is changing course following Dieselgate, in particular the future of diesel engines and battery-powered vehicles and new trends in mobility.
Handelsblatt: Mr. Müller, you were at the Geneva Motor Show in March when the new Bugatti Chiron was unveiled, with a 1,500-horsepower engine and a top speed of 420 kilometers per hour (260 mph). Was that the last appearance of a race car from VW?
Mr. Müller: Experts and, most of all, customers were enthusiastic about the car. We have received many advance orders for the Chiron. In other words, there is apparently a market and a clientele that likes to buy products like the Chiron. And if it stays that way, we will continue to provide models that appeal to these customers.
When speaking about the refugee debate recently, you said that managers also need to demonstrate the right attitude. But doesn’t this also apply to the environmental debates of our time? Or, to put it differently, how green is Matthias Müller?
You are alluding to our new Strategy 2025. I am interested in finding convincing answers for tomorrow, not ideologies. The Volkswagen Group has made it its mission to become a mobility provider with a full range of products. That includes carsharing models and a variety of new electric cars, as well as the Bugatti high-performance sports car you mentioned. And who knows, perhaps the next version of the Chiron will be an electric car.
You plan to sell two to three million fully electric cars in 2025. It sounds ambitious. But how are customers reacting?
To begin with, we simply need a convincing product line. Countries like Norway have shown that this shift in propulsion methods is possible. Our industry has reached an agreement with the German government that these cars will be given state support, and that includes the necessary infrastructure. High prices and short ranges are the reasons things are not progressing rapidly today. But we are convinced that this will change. Electrification is an important building block of our new strategy.
The old VW board of management emphasized bulk and size, and it aimed to permanently overtake Toyota and position itself at the top of the global automobile industry. Is that yesterday’s news?
The former strategy was successful in its time. But it wasn’t just a matter of size. VW also focused on customer and employee satisfaction, as well as competitive earning power. We will continue the good aspects of that strategy. And we will either get rid of or change the things that no longer work.
The diesel emissions scandal was and remains a serious blow to Germany’s largest automaker. But was it also a wakeup call which kick started the current changes?
Long before the diesel scandal, we knew that we had to change the company, by making structures more decentralized, for example. But it is true that many things are possible now that wouldn’t have worked or would have taken too long in the past. I have been in charge for eight months now, and it was clear to me from the very beginning that we need to embark on new paths. Our industry is in the midst of a transformation process. And the Volkswagen Group is part of this process.
As the head of Porsche, you were responsible for 2 percent of auto sales at VW. Now you are responsible for 100 percent of cars and 150 percent of the company’s problems. How does that feel?
I liked working at Porsche. It was a lot of fun. There is no doubt that I am now feeling the other dimension of responsibility. Reforming this company is exhausting, but I enjoy it. The good thing about it is that everywhere we look, we are seeing a substantial willingness to change. That’s why I am confident that our employees will be proud of Volkswagen once again in one or two years.
Things are not looking good for the company’s VW core brand. So far, VW has simply been unable to achieve the strict profitability objectives already in place under former CEO Martin Winterkorn. Why should it be different now?
There is never a guarantee. But there is confidence in the management, and in the entire board…
…including Herbert Diess, the head VW’s passenger brand, who is constantly tangling with the employee representatives, perhaps out of necessity…
…of course. The supervisory board recently expressed its confidence in the entire brand management team. But it is true that we have not hit our profitability targets for the VW brand in the past. The problem is that there may been too much emphasis on size, while too little attention was paid to profitability. We are changing that now. We need to become more efficient, if only because the core brand plays a key role in paying for enormous investments in the future.
But the traditionally powerful works council, which, together with the State of Lower Saxony, with its Social Democratic government, holds the majority of seats in the supervisory board, also has to cooperate.
We are in agreement with the chairman of our works council about where the journey is headed. It’s true that there are disagreements here and there. But Herbert Diess and Bernd Osterloh both know how to cooperate and cope with the issues. This fall, they will explain how the VW brand will implement its “Pact for the Future.”