CEO says changing VW culture proving tougher than expected

Some managers stuck in pre-dieselgate mindset, Mueller says

CEO says changing VW culture proving tougher than expected
German carmaker Volkswagen CEO Matthias Mueller attends the company's annual news conference in Wolfsburg, Germany, March 14. REUTERS/Fabian Bimmer





HANOVER, Germany (Reuters) — Some Volkswagen (VW) managers are struggling to adapt to the German carmaker's drive to improve accountability after its diesel emissions fraud, its chief executive said, suggesting it could take years to establish a new corporate culture.

The attempt by the world's largest automaker to become more transparent and decentralize power is seen by investors as a key part of its campaign to regain trust following its admission in 2015 that it cheated U.S. diesel emissions tests.

But trying to convince Volkswagen managers of the need to change is still proving tough 20 months after "dieselgate" broke, according to Matthias Mueller, who became CEO a week after the scandal came to light in September 2015.

"There are definitely people who are longing for the old centralistic leadership," Mueller said during a discussion with business representatives late on Monday. "I don't know whether you can imagine how difficult it is to change the mindset."

Before "dieselgate," there was an extreme deference to authority at VW and a closed-off corporate culture that some critics say may have been a factor in the cheating.

One of his priorities since taking the helm has been to decentralize power and reform the command-and-control structure that was prevalent under former bosses Martin Winterkorn and Ferdinand Piech, Mueller said.

When the cheating was uncovered, Mueller promised VW would learn from its mistakes and introduce changes to prevent such a scandal from recurring, but on Monday he admitted the task was harder than expected.

"You are permanently caught in a field of tension based on the question of how much (decentralization) can the company tolerate and how much can it not," he said.

"The process (of change) has been started but it's a process," Mueller said. "One now has to endure this, also as chief (executive), that some things go wrong and some things remain unsuccessful while other things are successful."

Many mid-level managers thrived under pre-dieselgate arrangements that allowed them to shift responsibility to others, and they are struggling to embrace Mueller's drive for openness and leadership, sources at VW have told Reuters.

With VW also pursuing a multi-billion-euro shift towards electric cars and new technologies, many managers are focusing on protecting themselves rather than providing leadership in their departments, the sources said.

"The search for those who made mistakes always took precedence over the search for the mistakes," one said, speaking on condition of anonymity. "That mindset is still there."

After Porsche's ill-fated attempt in 2008-09 to take over much-bigger VW, Mueller said it took him three years as CEO of the sports-car maker to establish a new culture at the firm with its then-12,000 workers and shift the focus back to the product.

"Of course there are anxieties, it's not an easy undertaking" to overcome VW's management hierarchies, he said. "The only question is how long will it take?"


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