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Volkswagen: One year after the scandal

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Berlin - One year ago, Matthias Mueller took over as Volkswagen chief in the wake of the carmaker's admission that it cheated on emissions tests around the world. Today, he is still battling to overcome the scandal and restore VW's battered image.

VW car sales have recently started to pick up and the group's share price has steadied after plunging by more than 40 percent in the wake of the revelations that the company had installed software in about 11 million diesel vehicles aimed at manipulating emissions tests.

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File picture: Fabian Bimmer / Reuters.

But 63-year-old Mueller still has to steer the company through a minefield of lawsuits, regulatory probes and recalls - the costs of which, analysts say, could eventually add up to 35 billion euros (R536bn).

“The various cases could drag on for at least a decade, meaning the actual total cost of the scandal might not be definitely known for 10 years at the earliest,” said Frank Schwope, analyst with the German bank NordLB.

In the meantime, other companies have been sucked into the scandal, including VW's luxury offshoot Audi and German auto supplier Bosch, which US lawyers allege helped to design the emissions test-rigging devices.

“Of course there are setbacks,” Mueller said this month. He took over as VW chief at the height of what is the biggest crisis in the 78-year history of Europe's biggest carmaker.

“Nevertheless, Volkswagen has made substantial progress in the last twelve months,” he insisted.

Cost-cutting programme

Based in the northern German city of Wolfsburg, Mueller has already launched a major cost-cutting programme at the company's core VW brand and axed its dividend for the current year as part of efforts to foot the bills for the scandal.

“We cannot turn back time,” Mueller said, adding that VW's mission is “to do everything to restore lost trust.”

In a bid to head off a showdown with VW's powerful unions over the belt-tightening plans, Mueller was forced earlier this year to agree to a pact setting out plans for investment and protecting jobs.

More recently, VW has attempted to cast off the shadow of the emissions scandal with a series of bold moves aimed at underlining the carmaker's future development plans, including stepping up investment in electric cars.

VW insists that it will complete the recall of affected diesel vehicles in Europe by next year.

But about half of the 8.5 million cars in Europe fitted with the emissions-cheating software still have to be repaired.

Legal woes continue

Meanwhile, VW's legal woes continue to mount. Another two German states said last Friday that they plan to sue the troubled carmaker for damages as a result of losses from their shares in the group since the scandal broke.

Both Hesse and Baden-Wuerttemberg said they were joining the southern state of Bavaria in launching legal action against VW, consequently adding to the raft of lawsuits the company faces in Germany.

VW has been able to negotiate a $14.7 billion (225bn) settlement with US car owners caught up in the scandal - but about 85 000 cases continue to be contested.

There are several other lawsuits also pending in the US, which is where the scandal first broke when authorities confronted VW with evidence that it had been cheating on emissions tests.

The VW emissions scandal: Timeline of a crisis

September 3, 2015: Volkswagen admits to the manipulation of diesel-engine emissions tests during closed-door talks with the US Environmental Protection Agency (EPA).

September 18: The EPA discloses that VW installed software in its cars that produced lower measurements in diesel emissions tests.

September 22: VW issues a profit warning to shareholders and announces it is setting aside 6.5 billion euros for future vehicle recalls and the costs of the investigation.

September 23: VW's chief executive Martin Winterkorn resigns.

September 25: Porsche head Matthias Mueller is appointed new VW chief executive as part of a series of top management changes.

September 28: German prosecutors launch a formal investigation into former chief Winterkorn on allegations of fraud.

October 7: VW chief financial officer Hans Dieter Poetsch is appointed head of the carmaker's supervisory board.

October 8: Police raid VW's headquarters in Wolfsburg, as well as other locations and several employees' homes. VW North American head Michael Horn is called in for questioning by US lawmakers.

October 15: Germany's Federal Motor Transport Authority (KBA) orders the mandatory recall of all VW diesel cars that were fitted with emissions-cheating software - 8.5 million in Europe, 2.4 million in Germany.

October 28: VW reports a 3.5-billion-euro loss for the third quarter as it absorbs the impact of the scandal.

November 3: The carmaker admits that as many as 800 000 additional cars are affected by irregularities in carbon dioxide emissions.

November 13: VW brand chief Herbert Diess tells DPA that he does not see any threat to the group's “core workforce” despite costs of the scandal.

November 24: German prosecutors launch a tax evasion probe linked to VW's admission that there were irregularities in its vehicle testing of carbon dioxide exhaust emissions.

January 4, 2016: The US Justice Department files an environmental lawsuit against VW over the cheating on emissions standards.

January 11: At the Detroit auto show, VW announces the extension of a voucher programme to US consumers as a form of apology.

January 12: California's environmental regulator rejects VW's recall proposal, sending the carmaker back to the drawing board.

January 27: VW starts its mass recall with an error, beginning to refit cars in Germany before official permission was given.

February 5: VW postpones the release of its 2015 annual results and delays its shareholders' meeting. The dates are moved to April 28 and June 22.

March 7: In response to investors' accusations against VW's former top executives, the company places the blame on Winterkorn. VW supervisory board member Wolfgang Porsche urges a new culture of dialogue at VW in an interview with DPA.

March 8: VW brand chief Diess comes under fire during an employee representatives' meeting. Company sources say about 3000 administrative jobs in Germany could be eliminated by the end of 2017.

March 9: Media outlets report that the US Justice Department is expanding its probe of the carmaker through the use of bank fraud and tax laws. US VW chief Horn steps down.

March 15: Investors file a lawsuit against VW in a German court for more than 3.5 billion euros. Pressure grows on the divisions responsible for auto financing and leasing to save money.

March 17: The news agency Bloomberg reports that VW is in talks with US officials to set up two funds to pay for environmental damage. The funds would be put towards emissions-free vehicles and clean transport as a first step towards settling a civil lawsuit in the US.

April 6: US dealerships enter the emissions scandal fray by filing a lawsuit in Chicago claiming that VW intentionally defrauded them.

April 12: VW's top management agrees to a “considerable reduction” in bonus payments to key executives, sources close to the ongoing negotiations tell dpa, though it remains unclear how deep it will go.

April 21: VW agrees with US regulators to offer “substantial compensation” and car buy-back deals as part of a settlement of the diesel emissions scandal.

May 31: VW unviels bigger-than-forecast drop in first-quarter net profit, which fell to 2.3 billion euros from 2.9 billion euros in the same period of 2015.

June 16: VW anmnouces plans to step up investment in electric cars as part of “Together - Strategy 2025” plan.

June 20: German prosecutors expand their investigation into Winterkorn to include alleged market manipulation. The former executive is accused of not informing shareholders in a timely manner.

June 28: VW agrees to pay 14.7 billion dollars to cover buy-backs, damages and penalties in the US.

July 19: The states of Maryland, New York and Massachusetts launch lawuits against VW.

July 28: VW surpasses rival Toyota Motor in global sales in the first half of 2016.

July 29: VW is fined 176 million dollars by the US state of Washington for installing illegal software.

August 2: The southern German state of Bavaria demands VW pay 700 000 euros for emissions scandal losses.

August 23: VW resolves a dispute with two external suppliers that brought production to a halt.

September 1: Australia's consumer watchdog sues VW and its local subsidiary for lying to customers about the levels of toxic gases emitted from their cars.

September 7: Auto parts maker Bosch faces allegations it helped to design the VW emission test evasion devices.

September 10: The US Justice Department says a VW engineer has admitted his role in the carmaker's emissions-cheating and is cooperating with prosecutors.

September 16: German states Hesse and Baden-Wuerttemberg join claim for damages following plunge in VW share price.

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