Matthias Muller was appointed as chief executive of Volkswagen, the world’s No 1 carmaker, to clean up after its emissions scandal and drag it into the modern world of electric and self-driving cars.
He has been buffeted by a formidable counterforce — VW’s own managers, many of whom still yearn for the old autocratic corporate culture and remain sceptical of moves to downgrade the business of cars powered by fossil fuels.
“There are definitely people who are longing for the old top-down leadership,” Mr Muller, 63, told an industry gathering in Germany in May, speaking of the corporate culture he inherited. “I don’t know if you can imagine how difficult it is to change their mindset.”
That mindset, people inside and outside the company say, included a conviction among many at VW that the internal-combustion engine, especially the diesel, is a proven and superior technology that can meet emission standards for years. That conviction, they say, helped lead engineers to rig diesel-engine software to appear to meet such standards — the crux of the scandal that emerged in 2015.
It also left VW dragging its feet in electric vehicles and created internal scepticism about new ways customers were using cars — ride-hailing services such as Uber, car-sharing business like Zipcar and apps that help steer drivers to businesses and services.
Almost immediately after taking over in September 2015, Mr Muller presented a plan to move beyond VW’s huge business in diesel and petrol vehicles and generate at least 25 per cent of sales from electric cars. He argued VW needed to create a “significant share of revenue” from apps and services.
“What are you doing?” demanded one angry executive during a meeting of top managers last year, referring to the CEO’s stress on shifting beyond conventional vehicles, according to people present. “You are driving the nails into our own coffin.”
Such exchanges have been frequent and continue to this day, say some company insiders.
VW, which owns brands such as VW, Audi, Porsche, Skoda, Seat and Bentley, is facing a perilous moment. Its emissions-tampering scandal, which has cost it nearly $US25 billion ($31.4bn) in fines, penalties and customer compensation, has been followed by a market-share erosion in its core European markets. “Volkswagen must change,” Mr Muller said in the May meeting, “because our industry is going to change more deeply in the coming 10 years than in the 100 years before.”
As Mr Muller tries to move VW beyond the diesel debacle, it continues to haunt him. The European Union’s top antitrust regulator last month confirmed that after a tip from VW last year, it has been investigating whether VW, BMW and Daimler violated antitrust rules through collaboration on diesel emissions and other technology going back more than 20 years.
Later last month, the German government said it found illegal software that manipulated emissions on Porsche’s Cayenne and ordered a recall. Porsche said it alerted German authorities to the issue and that Audi, the engine’s manufacturer, was responsible.
Shareholders are largely supportive of Mr Muller’s efforts but say VW has lost precious time.
“This shift to electric and digital mobility services is the right thing to do, but it comes five or six years too late,” says Ingo Speich, a fund manager at Union Investment, a VW shareholder. “Volkswagen has lost any first-mover advantage because they kept clinging to the old way of doing things.”
