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Volkswagen to pick Porsche boss as new CEO

2015/9/25 9:31:29   source:China Daily

  BERLIN - Volkswagen will name Matthias Mueller, the head of its Porsche sports car brand, asits chief executive as it tries to recover from a scandal over its rigging of US vehicle emissionstests, a source close to the matter said.

  Mueller, 62, has been widely tipped to succeed Martin Winterkorn, who quit on Wednesday,when the German carmaker's supervisory board meets on Friday, and will take responsibility forthe biggest business crisis in Volkswagen's 78-year history.

  Shares in the world's largest carmaker by sales have plunged as much as 40 percent sinceFriday, when US regulators said it had admitted to cheating emissions tests on diesel cars.

  VW also faces a battle to restore the confidence of customers and motor dealers who haveexpressed frustration at a lack of information from the company about how they will be affectedby the scandal.

  Mueller has a majority on the 20-member supervisory panel, the source said. Volkswagendeclined to comment.

  The board will also dismiss the head of the company's US operations and top engineers at itsAudi and Porsche brands, a senior source told Reuters, as it seeks a fresh start.

  Mueller is a management board member of Porsche SE and so is close to the Piech-Porschefamily that controls Volkswagen through the holding company. He also spent many years at Audi.

  "He is a good choice even though he may be seen as a transitionary CEO until another internalcandidate such as VW brand CEO Diess has earned their stripes," said Arndt Ellinghorst, ananalyst at Evercore ISI investment banking advisory firm.

  He said Mueller's priority would be renew VW's leadership, restructure costs and turn VW into a"performance-driven company" where management was more accountable."

  VW said on Tuesday about 11 million of its cars worldwide were fitted with the software that wasfound to be cheating emissions in the United States. The US Environmental Protection Agencyhas said Volkswagen could face penalties of up to $18 billion.

  However, the crisis is still deepening. Germany's transport minister, Alexander Dobrindt, said onThursday Volkswagen had manipulated tests in Europe as well as the United States.

  Dobrindt told reporters vehicles with 1.6 and 2.0 litre diesel engines were" affected by themanipulations that are being talked about," but did not say how many were affected.

  The company is under pressure to act decisively, with German Chancellor Angela Merkel urgingit to quickly restore confidence in a business held up for generations as a paragon of Germanengineering prowess.

  "There will be further personnel consequences in the next days and we are calling for thoseconsequences," Volkswagen board member Olaf Lies told the Bavarian broadcasting network.

  The research and development chiefs of Audi and Porsche, Ulrich Hackenberg and WolfgangHatz, will be removed by the supervisory board, as will Volkswagen's top executive in the UnitedStates, Michael Horn, the senior source told Reuters.

  Hackenberg and Hatz had both held senior posts at VW in development, including of engines,before they switched to Audi and Porsche. They are among VW's highest-ranking engineers.

  Horn acknowledged this week that the company had "totally screwed up" by deceiving USregulators about how much its diesel cars pollute.

  "DEFEAT DEVICES"

  Regulators in Europe and Asia had already said they would investigate Volkswagen and othercarmakers, and Volkswagen also faces criminal inquiries and lawsuits from cheated customers.

  Italian prosecutors have opened a preliminary probe, a judicial source said, and the EuropeanCommission urged all member states on Thursday to investigate how many cars use the so-called "defeat devices" employed by Volkswagen to rig tests.

  The scandal has sent shockwaves through the car market, with manufacturers fearing a drop indemand for diesel cars and tougher regulations and customers worrying about the performanceand re-sale value of their cars.

  Dobrindt said Europe would agree new emissions tests in coming months that should take placeon roads, rather than in laboratories, and that random checks would be made on allmanufacturers.

  So far, no other carmaker has been found to have used "defeat devices." German rival BMWsaid on Thursday it had not manipulated emissions tests, after a magazine reported some of itsdiesel cars were found to exceed emissions standards.

  DIESEL CAR DRIVERS WORRIED

  Friday's board meeting had originally been due to extend the contract of Winterkorn and set out anew management structure.

  Though Winterkorn oversaw a doubling in sales and a near tripling in profit in his eight year rein,he faced criticism for the company's underperformance in the United States and for a micro-managing style that critics say delayed model launches and hampered its ability to adapt to localmarkets.

  Analysts said a new management structure, possibly more decentralised but also with a clearersystem of checks, was all the more urgent, with top executives apparently unaware of theemissions test cheating despite a tight control on decisions.

  The company has yet to announce which cars and construction years are affected, and whetherthey will have to be refitted.

  A women at the reception desk of a Volkswagen dealership in Frankfurt, who declined to giveher name, said she had received many queries from diesel car drivers.

  "But we haven't got the ultimate answer because we haven't got much information fromVolkswagen," she said.

  Volkswagen said in a statement on its website it was working to answer these questions asquickly as possible. "It goes without saying that we will take full responsibility and cover costs forthe necessary arrangements and measures," it said.

  At 1515 GMT, the stock was up 0.2 percent at 111.8 euros following its decline in previous days.

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