Exclusive: VW shelves overhaul of U.S. business until scandal abates - sources

Tue Oct 27, 2015 2:06pm EDT
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By Andreas Cremer and Jan Schwartz

BERLIN/HAMBURG (Reuters) - Volkswagen has shelved plans to overhaul the management of its North American business and will not address its future strategy there until it has reached legal agreements over its rigging of emission tests, two sources familiar with the matter said.

Volkswagen (VOWG_p.DE: Quote) has long been struggling in the United States and the country became the focus of the biggest business crisis in its 78-year history last month when American authorities exposed its use of "defeat device" software to cheat diesel emission tests.

The German carmaker now faces intense U.S. legal scrutiny including more than 300 lawsuits, mainly from individual drivers of its diesel cars, and investigations by Congress, the Department of Justice and the Environmental Protection Agency.

It picked group veteran Winfried Vahland as its North American chief last month, before the emissions crisis erupted, as it pushed a policy to cede more power from its German HQ to regional and car brand divisions.

But the former Skoda boss quit VW three weeks later, as the scandal raged. The 58-year-old, who had been considered a possible replacement for Martin Winterkorn as VW group CEO, had unspecified "differences of opinion" over the organization of the North American business.

Volkswagen has no plans to appoint a new head for North America until it has survived the legal assault by coming to agreements with plaintiffs and regulators, according to the sources, who said that this could take months.

"What matters more than anything else right now is to sort out this disaster," one source said.

"If we fail to do that, then questions that are completely different (than the future U.S. leadership) will come up," he said, declining to elaborate.   Continued...

File photo of Volkswagen logos at a dealership in Madrid, Spain, October 20, 2015. REUTERS/Sergio Perez /Files