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CNBC Transcript: Interview with Matthias Müller, Volkswagen CEO


Following are excerpts from a CNBC interview with Nancy Hulgrave and Matthias Müller, Volkswagen CEO (via a translator).

NH: Let's start again if we may, talking about the new deadline that was set by a US judge - he's saying March 24th you must present another fix for the diesel cars in the United States. Are you confident that you can reach that deadline?

MM: Yes, we've worked hard to develop this package that we want to offer and to develop it in a reliable and comprehensive manner. Our colleagues will now be locally on the ground working to achieve this deadline to discuss the content of this package with the authorities and then we'll see what the result will be.

NH: And if the deadline is not reached if the regulators in the United States once again reject your proposal, at that point, do buy-backs become an inevitable option?

MM: Well there's a host of possibilities: buy-backs, recalls of the vehicles, other options. As I've said, I don't want to pre-empt results here but I am confident that we will reach a solution together.

NH: And so much of what happens in the United States regarding the recall process and the fix there will have an impact on your financial results. We now know that the financial results have been delayed. Do you know when they will be released and can they be released until you have a resolution in the United States?

MM: Ideally, we should wait for the result on the US at the publication of the financial statements -- we've postponed the annual general meeting because we want to improve the quality of our annual result and the result of the negotiation in the US, of course, has an important effect here.

NH: Are you expecting that you will have to increase the provisions that you have already set aside, some 7 billion so?

MM: Until now these 6.7 billions were provisioned for the recall and we assume and are confident that the number of -- or the volume of -- the provisions needs to be increased. But, to mention figures at the moment would be speculation.

NH: We've talked about the financial impact related to the actual fix in the United States, but you're also facing this 46 billion potential lawsuit from the Justice Department. You said those talks are progressing, what exactly does that mean? Are you confident that an eventual settlement will be much lower than that figure?

MM: I am not confident but I hope, of course, because our calculations lead to different results of course. These 46 billion or any other figure at this point in time would be paramount to speculation and we will not comment on that.

NH: But when you look at other automakers, Toyota and General Motors, for example, who had settlements with the Justice Department in the neighbourhood of 1 billion, for incidents that really cost lives on a severe level here. Do you fear that your punishment is disproportionate to the crime.

MM: I assume that the American authorities will be stringent but fair. So I believe a figure which you've mentioned is much too high. But as I stated, I will not partake in speculation at this juncture and I assume that we will reach an amicable agreement

NH: And whatever the financial cost eventually will be from this incident, even before the case broke, we knew that you were looking at way to improve profitability to catch up with some of your rivals in this space. What options are on the table specifically when we talk about negotiations with the Works Council? When we talk about wages and potential job cuts?

MM: Well, Volkswagen first of all is financially a very health company indeed. The many years we were very successful indeed and will continue to be so. Naturally, we'll have to wait for the consequences of the diesel crisis and use the aftermath to accelerate the reorganisation of the companies. There are many approaches to this affect. We do not want to be paralysed by this crisis, but take this impetus to become a better and more modern Volkswagen and we'll do that particularly by tackling electro-mobility, connectedness, digital renewal and autonomous driving…

NH: But we know you're getting ready for labour negotiations in the spring, it's already been rumoured that various parties within the Works Council are resistant to any changes in wages. How difficult is the strong influence of the Works Council making your efforts right now?

MM: Right, the negotiations will be begun in the course of the year. We do not have a proposal from the labour side on the table yet but I can tell you that the labour representatives in this co-determination company work very fairly on this whole issue and they are very level headed indeed, and they are willing to support the reorganisation of our company actively and in a positive manner.

NH: Other potential options when you talk about reducing your costs -- one being investment. Now many were surprised that you did not reduce your investment plans by even more than some had expected, but you did hint that going beyond this year, we could see a reduction. What kind of a reduction are your forecasting?

MM: In a company that works well it is usual to set priorities of course. So first investments in our products of course and the future of our products will be undertaken, I've given you some examples for this and some infrastructure measure don't have to be discontinued but maybe postponed for one of two years. And these tasks is something we are considering carefully and we do that in conjunction with all those concerned.

NH: And you have reiterated several times now that you are not considering a spin-off of any of your 12 brands but once again we're hearing speculation of talks through of various options within your trucks unit. Are you in active discussions for a spin-off of even a part of the trucks business?

MM: I cannot confirm that. You've quoted a speculation yourself and I see that as mere speculation as well. And again, there are discussions cropping up in the general population but we don't intend to sell off one of our 12 valuable companies.