Cliff Banks - The Banks Report

More Turmoil at Volkswagen

October 15, 2015 — The Volkswagen saga continues as its North American president and CEO Winfried Vahland resigned suddenly yesterday. Vahland, who had been Skoda’s CEO, was appointed to the newly created position in North America as part of the automaker’s scrambling to deal with its growing diesel engine scandal.

Vahland’s move potentially places Michael Horn, VW’s top executive in the U.S., in a stronger position. Horn, who had been rumored to be on the list of fired executives until U.S. dealers lobbied to save his job, has won high marks for his candid comments about the diesel scandal. From the dealer perspective, he’s exactly what VW needs in the U.S. — an executive that not only talks about dealer profitability, but is someone who is fighting for it.

Look for more announcements from Volkswagen following up on its current plan of paying dealers 1% of the MSRP of each vehicle sold in the third and fourth quarters of this year, along with another $300 per vehicle sold in September (Passat sales will get $600 each for dealers).

Meanwhile, Vahland’s resignation, although not directly related to the scandal, is because he wasn’t happy with the fact he wasn’t given a seat on Volkswagen’s Group board and that he was not reporting directly to Matthias Mueller, who replaced Martin Winterkorn as VW’s CEO, according to the The report by the DailyKanban called into question Automotive News’s assertion that Vahland resigned because his wife did not want to move to New Jersey.

The bad news for Volkswagen keeps coming and likely will for the next few months. The automaker announced yesterday it is recalling 8.5 million vehicles in Europe due to the diesel scandal. A recall in the U.S. likely won’t be issued until early 2016, according to VW, as it will probably take that long to determine a fix. It’s probable that the era of cheap clean diesel is over. Any recall fix — and any future diesels — will include urea injection and other emission reducing systems found other diesel powertrains.

The company also announced a few days ago that it will begin emphasizing electric vehicles and plans to build a standard electric architecture that can be used across multiple brands.

(For our initial analysis, read Volkswagen — Questions but Few Answers).

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