Engineers used software to pass emissions tests, salvage diesel engine project, reports say
October 4, 2015 – 5:08 pm ET
BERLIN — Volkswagen’s supervisory board will hold an extraordinary meeting on Wednesday when finance chief Hans Dieter Poetsch is expected to be appointed as new head of the 20-member controlling panel, two sources said on Sunday.
Europe’s biggest automaker faces the worst crisis in its 78-year history after it admitted to cheating on diesel emissions tests in the United States, with 11 million vehicles affected worldwide.
As well as appointing Poetsch, board members will review the latest findings of VW’s internal investigation which has already led to more than 10 suspensions of senior managers, a source close to the board said.
Bild am Sonntag reported that several engineers at VW have confessed to installing special software in 2008 to pass emissions tests. Ulrich Hackenberg, the suspended head of research and development at premium brand Audi, was still head of technical development at the VW brand at the time.
The decision to use defeat device software came as project engineers determined there was no way to meet both emissions standards and cost controls, a hurdle that threatened to bring the marquee engine project to a halt, Bild said.
The solution was a so-called defeat device that relied on software to disengage emissions controls when an auto wasn’t being tested, breaching emissions rules and prompting a raft of government investigations and lawsuits since the EPA cited the violations last month.
Volkswagen has also found more executives are involved in the scandal than previously acknowledged, a group bigger than just a few developers, Frankfurter Allgemeine Sonntagszeitung reported, citing officials close to the supervisory board.
Volkswagen declined to comment on the German newspaper reports, company spokesman Eric Felber said.
Martin Winterkorn resigned as CEO on Sept. 23. Hackenberg, a Winterkorn confidante who was responsible for VW brand development in 2007 to 2013, and Wolfgang Hatz, who ran the group’s powertrain development from 2007 and 2011, are among others who will leave, according to people familiar with the matter.
Heinz-Jakob Neusser, head of development for the Volkswagen brand, has also been suspended as part of the probe.
The manipulated software may have been put into parts supplied by Continental AG for 1.6-liter engines, Bild am Sonntag reported. Upgrading models with Continental parts would entail replacement parts, not just a software upgrade, Bild said.
Another engine-parts supplier, Robert Bosch GmbH, warned VW in 2007 that its planned use of the software was illegal, Bild reported on Sept. 27.
“We have no indication of any misuse of our technology,” Continental spokesman Felix Gress said by phone, adding that it wasn’t outfitted to gauge emissions.
Poetsch to take helm
Poetsch was originally scheduled to be named to the supervisory board at an extraordinary general meeting planned for Nov. 9.
At an internal company meeting last week at VW’s headquarters in Wolfsburg, Poetsch described the situation as an “existence-threatening crisis for the company” albeit a surmountable one, the Welt am Sonntag newspaper reported.
On Sunday, Volkswagen took out full pages in the Bild am Sonntag and Frankfurter Allgemeine Sonntagszeitung newspapers, replacing what it said should have been ads celebrating the 25th anniversary of German reunification with this message: “We will do everything possible to win back your trust.”
A survey by German market research firm Puls showed 41 percent of consumers see the brand as damaged for the long term, while 11 percent say they no longer want to buy a VW, the Frankfurter Allgemeine Sonntagszeitung reported.
Martin Schulz, the head of the European Parliament, said that the scandal would hit the German economy hard but the carmaker was likely to survive the crisis.
Chancellor Angela Merkel said she expected a limited impact on the German economy. “I believe that the reputation of the German economy, the confidence in the German economy is not so shaken that we do not continue to count as a good business location,” she told German radio.
VW provided the first information on Friday allowing customers to find out if their vehicles are affected, and it needs to tell Germany’s KBA watchdog by Wednesday when and how its cars will comply with emissions standards.
The day before, new CEO Matthias Mueller will have his first opportunity to explain to an expected gathering of about 20,000 workers at a closed-door factory event how he aims to steer VW out of the scandal.
British Prime Minister David Cameron said he did not rule out re-examining subsidies for diesel cars, The Sunday Telegraph newspaper reported, while Italy will test about 80 diesel models produced by eight leading carmakers, financial daily Il Sole 24 Ore said.
Reuters and Bloomberg contributed to this report.
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