Electric SUVs

Audi CEO says he still has VW's support despite widening scandal

Volkswagen Preview Night At Frankfurt Auto Show
Rupert Stadler is still in the driver's seat at Audi. But for how long? Source: Getty Images

If any German car executive feels like he has a bulls-eye on his back, it’s Rupert Stadler, the controversial CEO of luxury automaker Audi. The tabloid newspaper Bild even reported last week that Mr. Stadler would be replaced in March, a story that parent company Volkswagen felt obliged to quickly deny.

Mr. Stadler’s vulnerability stems from his firm’s deep involvement in the so-called diesel scandal in which Volkswagen and its subsidiaries, Audi and Porsche, were caught red-handed in the United States in 2015 with software that allowed diesel cars to pass emissions tests but then produced heavy pollution once the cars were on the road.

Despite the diesel scandal now widening in Germany, Mr. Stadler said in an interview with Handelsblatt that he continues to have the backing of VW management. “I feel the support very clearly,” he said. “It cannot be prevented that speculation arises again and again.”

“Audi cooperates very closely with the investigating authorities.”

Rupert Stadler, CEO, Audi

One of the reasons the speculation keeps percolating is that Audi’s legal case looks increasingly dire. Prosecutors in Munich searched Audi’s Ingolstadt headquarters earlier this month for the second time, as well as the private homes of a number of top executives. Two former Audi executives are being held in pre-trial custody in Germany as the investigation continues.

When asked about the widening investigation, Mr. Stadler replied tersely: “Let the authorities do their job and let’s not speculate on speculation.”

In January this year, a full two and a half years after Audi admitted its role in the United States, Germany’s federal motor transport agency (KBA) said it had found the same emission defeat devices on Audi’s full range of diesel cars then still being sold in Europe. It ordered the recall of 77,000 cars in Germany and 127,000 vehicles in the rest of the world, to correct the problem.

The Munich prosecutors, who were initially focused on the scandal in the US, are now clearly zeroing in on who was responsible for the illegal devices installed in cars being used in Europe.

Mr. Stadler maintained that Audi “cooperates very closely with the investigating authorities.” He said that this is evident from the fact “that we systematically check our engines and present the findings,” but he didn’t explain how the more than 200,000 cars recalled by the KBA because of illegal defeat devices were still on the road.

In the sturm und drang of the diesel scandal, Mr. Stadler has proved to be a deft survivor. Unlike VW CEO Martin Winterkorn, who took responsibility for the scandal and resigned in 2015, Mr. Stadler has continued at the helm of Audi since 2010 though many wonder how Audi’s top management could not have been aware of such widespread cheating.

One reason for his popularity back at VW headquarters in Wolfsburg is that despite the diesel scandal, Mr. Stadler is selling a lot of cars. In January, for example, sales were up 20.3 percent compared with a year earlier. Audi was the largest contributor of profits to VW’s bottom line, but even that has become unclear.

“In 2017, we set a new sales record and we will announce a decent annual result shortly,” Mr. Stadler said. “Despite all the burdens and challenges we are on course. Nevertheless, we made a small reset,” he said, using the English word “reset,” which is often used in German to mean setback or loss. Then, when challenged about the size of the “reset,” he quickly added: “No, a big one. More important than success in sales is that we are sure to position ourselves for the future.”

Noting that the car market has changed dramatically with sedan sales sinking by 30 percent and SUV sales gaining the same amount, he said the company was well prepared for the switch. He said the company’s all electric SUV, called the e-tron, will be on sale this year, ahead of rival models from BMW and Mercedes.

“We are strong in this segment and will continue to be so in the future,” he added.

Markus Fasse covers the auto industry for Handelsblatt and Martin Murphy specializes in the automotive, defense and steel industries. This article was adapted into English by Charles Wallace, an editor for Handelsblatt Global in New York. To contact the authors: fasse@handelsblatt.com and murphy@handelsblatt.com.

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