A New CEO for Volkswagen

Porsche CEO Matthias Mueller is replacing Martin Winterkorn, who resigned over the emissions-cheating scandal.

Matthias Mueller is Volkswagen's new CEO. (Jens Meyer / AP)

Updated on September 25 at 1:32 p.m.

Volkswagen’s board has picked Matthias Mueller, the chief executive of Porsche, to be its new CEO. Mueller replaces Martin Winterkorn, who resigned Wednesday over the emissions-cheating scandal that is hurting Europe’s largest automaker.

“My most urgent task is to win back trust for the Volkswagen Group—by leaving no stone unturned and with maximum transparency, as well as drawing the right conclusions from the current situation,” Mueller said in a statement.

Mueller’s appointment was one of several major changes announced Tuesday by Volkswagen’s Supervisory Board in response to the scandal that has affected 500,000 diesel cars in the U.S., and 11 million worldwide.

The scandal, as we have been reporting, came to light September 18 when the Environmental Protection Agency ordered Volkswagen to recall about 500,000 diesel cars that were installed with “defeat devices” to cheat emission tests. Those devices would activate pollution-control systems when the car was being tested for emissions, and they mostly weren’t activated during routine use. This made the cars worse polluters than the automaker claimed,violating the Clean Air Act and California’s state pollution-control regulation.

Volkswagen’s claims of clean diesel, on the face of it, were a lie. The company acknowledged as much, announcing this week that the “defeat devices” were installed in 11 million diesel cars worldwide. European officials called for a EU-wide investigation over the deception, South Korea said it would recall Volkswagens, the company faces fines and class-action lawsuits around the world, and Norway announced Friday that its economic-crimes unit was investigating the fraud. The company’s stock price has taken a beating.

The EPA announced Friday it had sent letters to “all automakers that we are stepping up our testing activities in response to VW’s alleged violations.” The agency also said Volkswagen does not have a 2016 model year EPA Certificate of Conformity or an executive order from California’s Air Resources Board for its four-cylinder diesel vehicles because the two agencies “are not yet convinced that the data and evidence presented by Volkswagen demonstrate the vehicles will perform as required by the regulations.” This essentially means the automaker cannot sell 2016 model year diesel cars in the U.S.

The scandal is also raising questions about the activities of other German carmakers. Auto Bild, a German newspaper, reported Thursday that BMW’s diesel engines exceeding regulatory limits, sending the luxury carmaker’s shares down. CNBC reported that SEAT, the Volkswagen-owned Spanish carmaker, installed more than 500,000 of the tampered diesel engines into its vehicles.

Stuart Pearson, an analyst at Exane BNP Paribas, told the Financial Times that Vokswagen is unlikely to have been the only car company to game the system.

“The artificial gaming of emissions tests threatens to become the car industry’s Libor moment,” he told the newspaper.

But that’s not easy to prove, as John German, a senior fellow with the International Council on Clean Transportation, told NPR.

“It’s the sort of thing you just don’t go around accusing companies of doing unless you’re absolutely sure,” he said.

His group commissioned the tests that discovered the fraud at Volkswagen.

But as Bloomberg points outs: “Almost as soon as governments began testing vehicle emissions, automakers found ways to cheat.”

Indeed, Volkswagens have been implicated in the past, as have Cadillacs, Ford, Honda, and Hyundai.