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Mueller's daunting task to rescue VW from diesel deception

A worker tests a red 2016 Volkswagen AG Golf TDI emissions certification vehicle inside the California Air Resources Board Haagen-Smit Laboratory in El Monte, California.
Patrick T. Fallon | Bloomberg | Getty Images
A worker tests a red 2016 Volkswagen AG Golf TDI emissions certification vehicle inside the California Air Resources Board Haagen-Smit Laboratory in El Monte, California.

Matthias Mueller faces a daunting week ahead as he tries to silence the critics and rescue Volkswagen from the ashes of diesel deception.

Mueller will wake up to a sober reality on his first full day as the new chief executive of embattled German auto giant.

Never mind the tedious induction paperwork and ordering new business cards, the new CEO could see an $18 billion plus bill from US regulators land on his desk as he comes to terms with fresh recall demands and a growing list of lawsuits piling up around the world.

He'll also have to answer to anxious shareholders who saw 25 billion euros wiped off the value of Volkswagen in five days. It's a remarkable change of fortune for the 62-year-old who just last week was enjoying a five-year run at the top job of Porsche, where the only threat keeping him up at night would have been a slowdown in China.

Now, the VW veteran is tasked with steering the world's largest automaker through an emissions-cheating scandal that has rocked the entire industry.

Mueller struck a humble but determined tone in his first press conference as CEO on Friday vowing to set things straight.

"My most urgent task is to win back trust for the Volkswagen Group," he told reporters.

But that task could prove easier said than done. On the same day that Mueller jumped into the driver's seat, Switzerland said it would temporarily ban the sale of Volkswagen diesel-engine models, impacting up to 180,000 cars. German politicians from the Social Democrats also urged Volkswagen to recall the 2.8 million cars believed to be impacted by the so-called defeat device software.

The developments come as some Volkswagen dealers in the U.S. raise concerns over the lack of communication from the German manufacturer. The National Auto Dealers Association (NADA) sent a letter expressing extreme "disappointment" with VW's conduct, saying "dealers are deeply concerned about how this breach of trust will will affect their customers." The group also said dealers stand ready to perform recall work.

Uncertainty surrounding the recall process leaves crucial questions unanswered about the costs associated with fixing the effected engines and whether VW will be forced to perform vehicle buybacks.

The latter could significantly increase the financial damage from recalls, raising the odds that the initial 6.5 billion euro ($7.3 billion) provision for the third-quarter will fall well short of the necessary writedown.

Speaking alongside the new CEO, Friday, members of the Volkswagen Supervisory board sought to limit the reputational damage of the scandal by blaming the incident on a "small group."

But there is a growing sense of frustration across Europe that VW has nobody to blame but itself.

Germany's leading news magazine, Der Spiegel, has called the debacle "The Suicide" on its new cover with a poignant image of American pall bearers carrying a VW to its grave.


Nancy Hulgrave

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