Too Close to the Old Guard

VW supervisory board distorted dpa
Does Mr. Müller have any real reason to celebrate?
  • Why it matters

    Why it matters

    In order to implement change, Matthias Müller will have to go up against his old supporters, Martin Winterkorn and Ferdinand Piëch.

  • Facts


    • Volkswagen has lost €30 million in stock value since the emissions scandal broke.
    • CEO Mattias Müller has close ties to both Martin Winterkorn and Ferdinand Piëch.
    • Passenger brand chief Herbert Diess, the other major contender for CEO, came from BMW and isn’t closely tied to VW’s power structure.
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The diesel emissions scandal has shaken Volkswagen, a once proud automaker, to its very core. Martin Winterkorn lost his job and 600,000 workers feel uncertain about their future. Customers and the government are angry.

The decision to systematically cheat diesel emissions tests has already cost Germany’s largest industrial enterprise €30 million in stock value. Add to that the damage done to Volkswagen’s image. The automaker now stands not only for German engineering know-how, but also for premeditated law breaking. It will take years before the company recovers from the scandal.

The time is ripe for a new beginning, but the supervisory board in Wolfsburg apparently didn’t have the courage to turn the page. Its decision to appoint Porsche chief Mattias Müller as Volkswagen’s new chief executive does not send a signal of fundamental change.

For all his many achievements, Mr. Müller is simply too closely tied to the old system. His owes his rise at Volkswagen to two men – Martin Winterkorn and Ferdinand Piëch. Both turned the automaker into what it is today – a complex, hierarchically organized power structure that’s nearly impossible to control.

The example of Deutsche Bank shows that a change of culture can only succeeded with a comprehensive change of personnel.

Mr. Piëch, the Volkswagen patriarch and former supervisory board chairman, wanted to install Mr. Müller as chief executive months ago, when he publicly distanced himself from Mr. Winterkorn. But Mr Müller’s close relationship with Mr. Piëch is both a blessing and a curse in the current situation.

On the one hand, virtually nothing happens at Volkswagen without Mr. Piëch’s support. On the other hand, Mr. Müller will be able get to the bottom of the diesel scandal only if he distances himself from Mr. Piëch. The investigation will seek to find out not just when Mr. Winterkorn first knew about the emissions cheating, but also why Mr. Piëch didn’t intervene as supervisory board chairman.

It’s questionable whether or not Mr. Müller will take a tough line against his two patrons. But this is exactly what’s needed in order to successfully implement a change of culture in which problems are openly addressed at Volkswagen.

Passenger brand chief Herbert Diess, who only recently left BMW, would have been better able to clean house in a more unbiased fashion. In contrast to Mr. Müller, Mr. Diess wouldn’t have needed to sign a statement declaring that he knew nothing about emissions cheating.

That’s no small difference at a time when absolute and unassailable integrity is key asset. In the end, this could prove more important than how well the new chief executive knows the company and how much power he has on the inside to implement a new strategy.

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The example of Deutsche Bank shows that a change of culture can only succeed with a comprehensive change of personnel. A credible new beginning at Deutsche Bank would have been impossible with Anshu Jain still at the helm, whose investment banking division was responsible for most of the legal trouble.

John Cryan, the new head of Deutsche Bank, doesn’t have this problem. He can credibly say that he had nothing to do with past illegality. That bolsters his power.

In order to successfully change Volkswagen, Mr. Müller needs independence and not just for the investigation into the diesel emissions scandal. He also needs independence in order to successfully restructure the company, reduce its dependence on China and reform its cost structure. Deutsche Bank taught one other lesson – cultural change succeeds only with economic success, otherwise the company won’t accept it.

Matthias Müller’s age does present one advantage. At 62, he’s reached the goal of his career and further ambitions are unlikely. One can only hope this will give Mr. Müller the independence that’s needed to completely change the automaker’s orientation. Otherwise the Volkswagen drama will simply go into the next act.


To contact the author: afhueppe@handelsblatt.com

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