VW CEO sees first fruits from turnaround effort

VW logo. (Odd Andersen, AFP)
VW logo. (Odd Andersen, AFP)

Frankfurt - Volkswagen chief executive officer Matthias Mueller said it will take two to three years for his wide-ranging revamp to bear fruit as he faces internal opposition to his shift of Europe’s largest car maker toward new technologies.

"Some believe this will pass eventually, that Mueller will only be there for five years, then there’s a new boss and when the emissions crisis is over, we’ll be doing better anyway," Mueller told reporters. "That’s not the case.

Regardless of the emissions crisis, this company must reform itself and align for the future."

VW’s management board is working on about 60 projects to overhaul the German automaker, including a cultural shift to get the company’s 12 brands and numerous divisions to cooperate, as it retools for technological change and seeks to recover from the diesel-emissions cheating scandal, Mueller said at a briefing late Monday in Hamburg.

The diesel-engine manipulation scandal that erupted last September pushed Volkswagen to accelerate a reorganization it was preparing amid a broad industry shift toward electric vehicles with new digital features like automated driving.

VW invested $300m in ride-hailing app Gett this year and is establishing a business unit focusing on new mobility offerings to expand beyond traditional manufacturing and selling of cars.

Cutting costs to revive profit at VW’s namesake brand, the company’s largest division by volume, is crucial for Mueller’s strategy through 2025, along with a reset of its operations in the US Sales in North America tanked in the wake of the diesel-engine manipulation, which involves about 11 million cars worldwide.

VW, which plans to introduce more than 30 electric cars by 2025 as production costs drop, anticipates sales of as many as 3 million battery-powered vehicles per year.

Maintaining VW’s financial firepower is crucial both for investing in new technology and meeting the expenses triggered by the diesel scandal. VW has set aside about €17.8bn so far for fixing the affected cars and related legal risks.

"We have the whole world at our throats," Mueller said. "We hope that it will come to a good end. Well, it’s not a good end anyway; it’s super expensive."

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