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Emissions scandal: VW boss apologised to Obama in person

2016-04-29 10:47

EMBATTLED AUTOMAKER: Matthias Mueller, CEO of German carmaker Volkswagen, during the company's annual press conference in Wolfsburg, Germany. Image: AFP / Ronny Hartmann

Frankfurt, Germany - Volkswagen's CEO says he apologised in person to US President Barack Obama for the carmaker's emissions scandal, in which it rigged its cars to cheat on diesel engine pollution tests.

CEO Matthias Mueller said he held a "two minute" conversation with the president during his visit to Hannover, Germany, this week.

Mueller said during the company's annual news conference: "I took the opportunity to apologize to him personally for this matter.

Facing massive fines

"I also expressed my thanks for the constructive cooperation with his authorities and naturally expressed the hope that I can continue to fulfill my responsibilities for 600 000 workers, their families, the suppliers, the dealers."

The US Environmental Protection Agency (EPA) could levy fines of up to $18-billion, but analysts think the punishment will not be that drastic. Volkswagen seemed to endorse that view by saying it had set aside €7-billion globally for legal costs from 2015, on top of €7.8-billion to cover fixes and an offer to buy back some 500 000 defective cars.

Read: How VW's 'defeat device' works

Overall, the company deducted €16.2-billion from earnings in 2015 to cover the costs of the scandal, in which it fitted cars with software that enabled them to pass tests but then turned emissions controls off during every day driving.

The scandal broke when the EPA took action against Volkswagen. Some 11-million cars worldwide have turned out to have the software.

Mueller said Thursday (April 28) that recalling and fixing the cars that were rigged to cheat on the tests "will remain our most important task until the very last vehicle has been put in order."

Analysts say the impact of lower sales could make the final bill much higher than the company's figure. Volkswagen says it is reporting costs that it knows about at the present time.

The company said last week that it lost €1.5-billion on an after-tax basis after a profit of €11.1-billion in 2014.

Volkswagen is currently working out a settlement with US authorities in federal court in San Francisco, and has said that would include an offer to buy back as many as 500 000 of the just under 600 000 defective vehicles.

Mueller used the company's annual news conference to also sketch out a plan to focus more on electric vehicles and services like car-sharing as it seeks to get past its emissions scandal.

He stressed that Volkswagen's car business remains "fundamentally sound" but detailed a promised plan to emphasize digital services and zero-emissions vehicles. The company would soon form a legally independent company to promote business in mobility services, which can include things like ride-sharing apps and car-sharing, he said.

20 new EVs by 2020

Mueller said that the company would "make electric cars one of Volkswagen's new hallmarks" with 20 new models by 2020.

Volkswagen had previously emphasized diesel technology, which has suffered a blow since it became clear Volkswagen engines could not meet US emissions standards without cheating. The company has admitted using engine software that disabled emissions controls when vehicles were not being tested. That improved performance and mileage but meant the vehicles spewed far more than the legal limit of pollutants.

Read: Volkswagen to launch 20 new EVs by 2020

The annual report showed that Volkswagen would pay 12 current and former managers €63-million in base pay and bonuses in 2015.

Of that, €4.2-million in bonuses was withheld by decision of the board of directors — but could be paid later if the company's shares rise 25% in three years.

VW managers bonuses take a hit

Mueller was paid €1.1-million in 2015 in fixed compensation, with additional performance-related pay of €3.65-million. Of that bonus, €880 522 was held back for three years.

Former CEO Martin Winterkorn, who resigned after the scandal became known, would be paid a total of €7.3-million for his work until he left the job in September 2015. That includes €1.4 million in base pay and €5.9-million in performance-related pay.

The company said bonuses for individual top managers were 40% lower than they otherwise would have been because the company made a loss in 2015, even before the decision to withhold another 30%. Bonuses at Volkswagen are calculated based on the company's performance over several years.


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