Volkswagen CEO Herbert Diess warns that changing the world’s vehicles to electric is going to be difficult and very expensive. Picture: NEWSPRESS UK
Volkswagen CEO Herbert Diess warns that changing the world’s vehicles to electric is going to be difficult and very expensive. Picture: NEWSPRESS UK

Wolfsburg — Volkswagen’s (VW) new chief vowed on Friday to push on with reform and cultural change to steer the German car giant out of the cloud of the "dieselgate" scandal and into a future of electric cars and sustainable mobility.

"It’s about continued development, not a revolution," said Herbert Diess, the Austrian who took over from Matthias Müller late on Thursday as CEO of one of the world’s largest automobile groups. "We will emphatically address the special challenges that lie ahead of us, especially in electro-mobility, digitisation and new mobility services," he told a press conference at the group’s Wolfsburg headquarters.

Diess promised to push on with "cultural change" in the company that suffered its deepest crisis when it had to admit in 2015 that it installed software in 11-million diesel vehicles worldwide to cheat on emissions test. The crisis has so far cost the company more than €25bn in buy-backs, fines and compensation, as well as massive reputational damage.

The car maker remains mired in legal woes abroad and in its home market, where it also faces possible diesel bans in some smog-clogged inner cities, a prospect that has already depressed resale prices to the chagrin of millions of owners of diesel vehicles.

"We lost a lot of trust, especially here in Germany, but also worldwide," Diess conceded, acknowledging that VW faced "a long road" towards winning back the confidence of consumers. He stressed, however, that VW remains opposed to costly hardware fixes for its cars, as well as to urban diesel bans.

A former executive with rival BMW, Diess joined VW only two months before the emissions cheating scandal broke in mid-2015 and is thus relatively untainted by the crisis. He takes over the company as a new, "super manager", running both the group as a whole, with its 640,000 staff worldwide, and the flagship VW brand, as well as the research and development and vehicle IT divisions.

While VW has defended its cherished diesel technology against the public backlash, it has also vowed to transform itself into a champion of greener cars in the medium term.

Diess’s predecessor Müller had already steered the mammoth car maker into a huge restructuring, aiming to offer electric versions of many of its models and streamline operations over the coming decade. But Müller himself landed in prosecutors’ sights over suspicions he may have known about the cheating before it became public and failed in his duty to inform investors.

"The new VW boss Diess has a long to-do list," Greens party parliamentary leader Anton Hofreiter told German news agency DPA. "He must finally clear up the diesel affair … otherwise, the charge of secrecy and cronyism will keep sticking to VW in future."

While Müller brought VW’s share price and profits back up to pre-crisis levels, observers say he made little progress in shaking up the firm’s famously hierarchical and insular corporate culture, which some critics believe discouraged employees from speaking up about the diesel scam.

Diess, the relative newcomer to VW, promised that "we will continue to anchor integrity and compliance within the whole organisation".

The change in CEO is part of a wider management shake-up for the VW Group, whose 12 brands include Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT and Skoda.

The company said it would re-organise to group its units into volume, premium and super-premium segments, as well as a China region portfolio to help it adapt "in a phase of highly dynamic change in the company and the entire automotive industry".

It would also prepare its truck and bus division for a future stock market listing after 2018.

VW’s goal is "to safeguard its position among the leaders of the international automotive industry with innovativeness and profitability", said supervisory board chair Hans Dieter Pötsch.

"Herbert Diess is the right manager to do that," Pötsch said, praising "the speed and rigour with which he can implement radical transformation processes".