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Piech and Winterkorn still at odds about VW leadership plan

Volkswagen Group Chairman Ferdinand Piech (above, right) and CEO Martin Winterkorn (above, left) will be meeting in the coming days to discuss who the next leader of the Volkswagen Group will be. This, of course, comes after a report last Friday in Der Spiegel where Piech said he didn't want Winterkorn to be the automaker's next chairman. Oh, to be a fly on the wall of that conference room. As Automotive News reports, Winterkorn had been widely viewed as the probable replacement for the 77-year-old Piech, until last week, when the current chairman said he was keeping the CEO "at a distance," in the German paper. While Winterkorn confirmed to German media on Monday that he still had a job, analysts aren't sure what Piech's comments will mean for the 67-year-old CEO's future, with some indicating he may end up being a "lame duck" leader. According to AN, Piech doesn't think that Winterkorn has the vision to lead the sprawling Volkswagen Group empire, even though the current CEO has the support of a number of other VAG stakeholders. "Piech knows what he is doing and will assume that he can get the supervisory board to implement his decisions," former BMW executive turned analyst Helmut Becker told German media, AN reports. Winterkorn has just over 18 months left on his contract, while Piech's term has another two years left on it, meaning it will still be some time before we find out how the Volkswagen Group's leadership issues play out.

VW air rule violation allegations 'stunning,' $18B fine unlikely

The big automotive news today was the US federal allegations that VW quietly and illegally installed software on approximately 482,000 diesel vehicles sold in the United States so that they would not return substandard results on government emissions tests. To say the least, this is potentially a very big deal. You can read the details of the government's allegations here. The problem seems to be with the NOx trap. Sam Abuelsamid, a former AutoblogGreen editor who is now a senior research analyst at Navigant Research's Transportation Efficiencies program, told me that there were some hints that VW's diesel emissions strategy had issues a while back. The vehicles affected by today's announcement are all equipped with the 2-liter, 4-cylinder TDI, he said. They all have the lean NOx (nitrogen oxides) trap, whereas all other current modern diesels use urea to treat NOx emissions. "When VW launched those vehicles, I went to the TDI launch program in Santa Monica and asked them if they were going to put the diesel engine into the Tiguan because that would be an ideal application," he said. "They said no, because it would be too heavy. Turns out, the NOx trap was enough to meet the emissions standards in the smaller cars, but not the Tiguan. That seems to be where the problem is, in the NOx trap. All the other big VW and Audi diesels, they use urea, just like BMW and Mercedes do." Abuelsamid added that, in California, to do an emissions test, testers don't stick a probe up the exhaust, as you would suspect. Instead, they just do a visual test to make sure nothing was tampered with and then plug a scanner into the OBD-II port to read the codes. The news today basically says that the cars were programmed to send out false codes, giving readings that testers are looking for instead of what's actually going on. "That's the background, as far as I know at this point," he said. This could be "a black eye on the auto industry." - John O'Dell Speaking at the AltCar Expo in Santa Monica just hours after the news first broke this morning, Edmunds.com's John O'Dell said the Fed's allegations were "stunning." The idea that VW might have gamed the system, he said, "underscores how important EPA clean air numbers are, that a company would allegedly stoop to this to try and meet them. Obviously, people are paying attention to that sort of thing.

VW may move production because of Russia's cutoff of natural gas

Volkswagen AG is exploring ways to counter a shortage in natural gas, including shifting production around its network of global facilities, signaling how the energy crisis unleashed by Russia’s invasion of Ukraine threatens to upend EuropeÂ’s industrial landscape. Volkswagen, EuropeÂ’s biggest carmaker, said Thursday that reallocating some of its production was one of the options available in the medium term if gas shortages last much beyond this winter. The company has major factories in Germany, the Czech Republic and Slovakia, which are among European countries most reliant on Russian gas, as well as facilities in southern Europe that source energy from elsewhere. “As mid-term alternatives, we are focusing on greater localization, relocation of manufacturing capacity, or technical alternatives, similar to what is already common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions,” Geng Wu, VolkswagenÂ’s head of purchasing, said in a statement.  RussiaÂ’s decision to throttle gas supplies to Europe has raised concerns that Germany might be forced to ration its fuel. Recent news that gas storage levels hit 90% ahead of schedule has soothed fears of acute shortages this winter, but Germany faces a challenge in replenishing depleted reserves next summer without contributions from Russia. Southwestern Europe or coastal zones of northern Europe, both of which have better access to seaborne liquefied natural gas cargoes, could be the beneficiaries of any production shift, a Volkswagen spokesman said by phone. The Volkswagen group already operates car factories in Portugal, Spain and Belgium, countries that host LNG terminals. Labor hurdles To be sure, any major production shift away from EuropeÂ’s biggest economy would face significant hurdles. VW has some 295,000 employees in Germany and worker representatives account for around half the companyÂ’s 20-member supervisory board. Any shift in production would likely involve a limited number of vehicles rather than wholesale factory shutdowns. While gas supplies for VWÂ’s plants are currently secured, the company has identified potential savings at its European sites to cut gas consumption by a “mid-double-digit percentage,” said Michael Heinemann, managing director of VWÂ’s power-plant unit. Still, the carmaker said it was concerned about the effect high gas prices could have on its suppliers.