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Volkswagen chief executive apologises to Barack Obama over emissions scandal

Published 28/04/2016

Volkswagen chief executive Matthias Mueller at the company's annual press conference in Wolfsburg, Germany (AP)
Volkswagen chief executive Matthias Mueller at the company's annual press conference in Wolfsburg, Germany (AP)

Volkswagen chief executive Matthias Mueller has apologised in person to US president Barack Obama for the car-maker's emissions scandal.

He said he held a "two-minute" conversation with the president during his visit to Hanover, Germany, this week.

"I took the opportunity to apologise to him personally for this matter," Mr Mueller said during a news conference in Wolfsburg, Germany.

"I also expressed my thanks for the constructive co-operation with his authorities and naturally expressed the hope that I can continue to fulfil 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 US dollars (£12.4 billion), but analysts think the punishment will not be that drastic.

Volkswagen seemed to endorse that view when it announced it had set aside seven billion euro (£5.4 billion) globally for legal costs from 2015, on top of 7.8 billion euro (£6 billion) to cover fixes and an offer to buy back some 500,000 defective cars.

Overall, the company deducted 16.2 billion euro (£12.6 billion) from last year's earnings 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 everyday driving.

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

Mr Mueller said 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 said last week that it lost 1.5 billion euro (£1.2 billion) on an after-tax basis after a profit of 11.1 billion euro (£8.6 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.

Mr Mueller also used the company's annual news conference to 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 emphasise 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.

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

Volkswagen had previously emphasised diesel technology, which has suffered a blow since it became clear Volkswagen engines could not meet US emissions standards without cheating.

The annual report showed that Volkswagen would pay 12 current and former managers 63 million euro (£49 million) in base pay and bonuses for last year.

Of that, 4.2 million euro (£3.3 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.

Mr Mueller was paid 1.1 million euro (£850,000) for last year in fixed compensation, with additional performance-related pay of 3.65 million euro (£2.83 million). Of that bonus, 880,522 euro (£683,770) was held back for three years.

The company said bonuses for individual top managers were 40% lower than they otherwise would have been because the company made a loss last year, 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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