Volkswagen to survive but not without pain, says CEO

Volkswagen’s new chief executive has told more than 20,000 workers the company will have to review planned investments and contain costs as it works to overcome a scandal over vehicles that cheated on emissions tests.

Matthias Mueller said they would overcome the crisis but said it “would not happen without pain”.

He told the meeting at the company’s sprawling home plant in Wolfsburg, Germany, that the company would have to put its future investments in plants, technology, and vehicles under scrutiny to spend only what was needed to maintain a leading edge. He told workers “we will do everything to ensure Volkswagen will stand for good and secure jobs”.

Volkswagen faces fines and lost sales after US environmental regulators found it had installed software that disabled pollution controls when the vehicle was not on the testing stand. The company has set aside €6.5bn to cover costs but analysts say that is unlikely to be enough.

Mr Mueller said some of the cars — more than 11 million worldwide — could be fixed by adjusting the software, while others would need mechanical fixes.

Volkswagen says around 11 million diesel vehicles worldwide -- including more than 110,000 vehicles in Ireland -- will need to go back to garages for a “refit” in the coming year.

Volkswagen has until today to give German regulators a binding timetable that sets out when it will have a fix for the cars in the country and by when it can be implemented. Volkswagen’s chief employee representative says that the emissions-rigging scandal will not have an effect on jobs for the time being.

Bernd Osterloh said it’s not possible to say today how the wrongdoing could affect jobs. But he said for now there would be no consequences for jobs, including those of temporary workers.

Osterloh acknowledged that recovering from the scandal won’t be painless. But he said the employee council “will watch carefully that this crisis, which was caused by a circle of managers, is not settled on the backs of employees”.

“We assume, for reasons of decency, the management board’s bonus will in case of doubt fall in the same way as the workforce’s bonus,” he said. The biggest business crisis in its 78-year history has wiped more than a third off Volkswagen’s share price, forced out its long-time chief executive and sent shockwaves through the global car industry and the German establishment.