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“We’ll cut everything not essential” – Matthias Müller

by | Oct 7, 2015 | Porsche News, Porsche People

As Volkswagen owners worldwide begin receiving their recall paperwork for the emissions débacle, the new CEO Matthias Müller has given the clearest indication yet of the scale of changes that are coming at Volkswagen. In a speech to 20,000 Volkswagen employees at Wolfsburg’s Hall 11, Müller made it clear that the Volkswagen of the future would be a very different organisation.

“Apart from the enormous financial damage which it is still not possible to quantify as of today,” said the Chairman, “this crisis is first and foremost a crisis of confidence. Our most important task will be to win back the trust we have lost with our customers, partners, investors and the general public. Only when everything has been put on the table, when no single stone has been left unturned, only then will people begin to trust us again.”

Volkswagen shares plummet by $60 Billion

Meanwhile, Volkswagen shares continue to nosedive, with a staggering $60 billion now wiped off the company’s value since the scandal broke. Even more staggering is the number of industry commentators who continue to insist that this is a fuss about nothing – either they have an errant line of code in their programming or this is costing VW PRs more than a few VIP perks. As more than half the value of Volkswagen AG has now evaporated, Müller is right to let his people and the global stock markets know that cuts are coming.

Suzuki Motor Company is the most recent bulk shareholder to abandon ship: Porsche SE buying back a 1.5% Volkswagen shareholding owned by the Japanese firm. As Porsche spends on share buybacks, ex-Porsche CEO Müller looks to slice billions off Volkswagen’s costs. “It is not possible to quantify the commercial and financial implications at present. That is why we have initiated a further critical review of all planned investments. Anything that is not absolutely necessary will be cancelled or postponed. And it is why we will be intensifying the efficiency program. To be perfectly frank: this will not be a painless process.”

Credit Suisse estimates $87 Billion Emission Scandal Cost

A number of analysts have put their best interns on the job that Volkswagen says is currently impossible: quantifying the scale of the financial implications. Possibly the best/worst one was a Credit Suisse report estimating the total cost (not including long term damage to reputation) at somewhere between $25 billion and $87 billion, with shares dropping another 20%. Volkswagen insists the numbers are nonsense, and the top estimate does seem completely ridiculous, but the lowest number is at least what it will run to, including settling the lawsuits and discounting replacement car prices for those affected. This will put a huge strain on Volswagen’s finances.

No doubt the shares will bounce back from wherever they bottom out, but another 20% would take Volkswagen to a third of its pre-dieselgate value. The VW emissions affair is certainly not a fuss over nothing and it is very relevant to the future of Porsche.


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