By on October 25, 2015

Matthias_Müller_2015-03-12_002

German business magazine Manager Magazin reported Saturday (via Reuters) that managerial promotions may be frozen beginning next year as the company looks to save money wherever it can amid the diesel scandal.

The company may also re-use as many parts possible when developing the eighth-generation Volkswagen Golf in order to cut costs.

After already setting aside 6.5 billion euros to cover costs associated with the largest scandal to hit the German automaker in over 50 years, it is still looking at an estimated final bill of 30 billion euros to cover the costs of fixing nearly 11 million affected cars, lawsuits and other associated charges.

Works council chief Bernd Osterloh doesn’t believe the freeze on promotions will be put in place, though expects other measures to be taken further up the ladder.

“We expect to see other symbols first: for instance, clear statements on management’s stance on bonus payments. The motto needs to be to lead by example,” Osterloh said in a statement to Reuters.

If the rumored measures are put in place, they will follow a massive cost-cutting initiative that will slash R&D spending at the automaker.

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45 Comments on “VW May Freeze Promotions, Cost Cut Next Golf Amid Scandal...”


  • avatar
    Joss

    Nothing good here. Talent may leave or not be attracted due to the freeze. VW more likely won’t be on the autonomous or battery cusp.

    • 0 avatar
      highdesertcat

      I think things may get worse yet in the coming months. We’re only at the beginning of the beginning of this drama.

      If you look back at what happened with Toyota and that drummed-up SUA debacle, it took months for everything to be sorted out.

      And that whole Toyota mess was an epic fail since there was no evidence to support the charges, other than insufficient driver IQ, and Toyota was later found to be totally innocent of all charges by reputable investigators from NASA, and others.

      The US gov’t got what they wanted — their ward, GM sold more vehicles and Toyota sold fewer vehicles during that period of fabricated charges. Toyota is a big player in the US, and rightfully so.

      Not so with VW. The proof of this cheating and malfeasance was gathered, verified and re-verified by disinterested parties before being released.

      And VW is not a player in the US. If anything, VW USA caters to a niche in America.

      Worldwide, VW is a big dog. I look for wider impact outside of America.

      • 0 avatar
        NMGOM

        highdesertcat – – –

        Absolutely.
        And you can forget about VW being the world’s largest car maker by 2018.
        Now that both GM and Toyota are hunkering down with new offerings and updated vehicles, they would be a real challenge to beat under ordinary conditions, but with the VW scandal and cutbacks, it (VW) has no chance.

        =================

        • 0 avatar
          highdesertcat

          NMGOM, if VW plays this well, I think they can emerge from this mess.

          VW’s problem is their diesel-powered line. The gassers are OK.

          VW has already reached out to Daimler for help in resolving this dilemma, and I’m sure that BMW also has a vested interest in keeping the German people’s investment in their auto industry a viable and profitable one.

          To me it would seem logical for VW to buy the latest and greatest proven diesel tech on the planet and retrofit it to their diesel line, right f’n now.

          Sure it’ll cost VW some money but this may well be an existential issue for VW.

          Besides, even GM and Chrysler used Honda and VW gas-engines in their line of cars in the past because those were clearly superior to GM’s own.

          In the long run, VW will be OK, “with a little help from their friends.”

          • 0 avatar
            NMGOM

            highdesertcat – – –

            You’re right. VW will not be destroyed by this. And they will emerge to see a bright sunny day. But whether they will emerge as the world large car-maker by 2018 is my issue.

            Much of their future success depends on brand value and market reputation. This diesel crisis goes beyond diesel cars. People may well ask the question, “If they (VW) were deceitful with THOSE engines, what other hidden bombshells will occur in other engines? And do I want to risk my resale value going down the tubes?”

            =================

          • 0 avatar
            highdesertcat

            NMGOM, maybe VW will take a play out of the Toyota playbook and bring out their people’s car with “all-the-options-a-buyer-needs” value, a la Toyota Camry LE.

            The reliability/durability issue will be a bit tougher to overcome. That is a reputation well-earned over a long time.

    • 0 avatar
      Lack Thereof

      But only “management” talent. Based on the rest of the automotive industry, I’m not convinced high-priced C-level execs help the company any more than getting random bums off the street to make the decisions.

  • avatar
    05lgt

    “The company may also re-use as many parts possible when developing the eighth-generation Volkswagen Golf in order to cut costs.”
    So we should see TMC levels of reliability and longevity, right? Theres nothing else to it; at least thats what I’ve read here.

    • 0 avatar
      wmba

      Re-use? Surely re-use means the part has already seen actual service.

      Continue to use existing part designs is more like it, but good English is not a strong feature here – the “as” is missing before “possible” too.

      Anyway, with MQB and MLB, that was the whole point, wasn’t it? Change the sheetmetal on the same basic underpinnings. Now they can add things like door locks and interior mirrors to the list of unchanged part designs.

      Don’t know who is advising VW on how to handle this crisis, but saying things like this strikes me as stupid. You diminish your customer’s future interest in your new product when you could have just kept quiet. Same thing wih the promotions angle. Seriously, who beyond the company gives a hoot?

    • 0 avatar
      jpolicke

      The trouble is that Toyota has time-tested powertrains and components with proven reliability and longevity. They could have used the 2.4l engine with the 4-speed auto for another 10 years and the Toyota faithful wouldn’t mind. They’d probably prefer it that way. What does VW have that didn’t need replacement or upgrade 5 years ago, let alone next year?

      • 0 avatar
        Hurf

        >The trouble is that Toyota has time-tested powertrains and components with proven reliability and longevity.

        So does VW!

        Coming in 2018: 2.0L in every model.

        • 0 avatar
          NMGOM

          Hurf – – –

          Beg to differ, a little.
          VW does have reliable power-trains, but other components?
          Electronics and electrical connections? Maybe not so much.
          See link:
          http://repairpal.com/difficult-to-diagnose-electrical-issues-are-typically-due-to-ground-issues-205

          My son got rid of his Jetta because it was an electrical nightmare.

          ===========

          • 0 avatar
            brettc

            This is why I cleaned and put silicone grease on the main grounds when I recently did my DSG service (battery has to be removed anyway). A TDI guru that I used to take my older cars to stressed the importance of clean grounds on VWs, it’s sage advice.

        • 0 avatar
          jpolicke

          The 2.slow came here in 1991 and was already 5 years out of date.

        • 0 avatar
          brettc

          The 2.5 and 2.slow is finally gone, only 1.8T and 1.4T now!

  • avatar
    Pch101

    It’s pretty much a no-brainer to cut payrolls and R&D when times are tough. The ad agencies should also be nervous, as it would not be a surprise if there were also cuts to advertising and marketing.

    • 0 avatar
      Lorenzo

      R&D cuts are a no-brainer, since Volkswagen’s R&D budget is huge. I’m not too sure about cut payrolls, since that requires layoffs that would be hard to get past the unions and government ownership.

  • avatar
    WhiskeyRiver

    VW has just offered, in advance, an excuse to use all the TDI diesel engines in their inventory.

    “Ok team. We’re going to use as many existing parts as possible on the new Golf. Whatta we got?”

    “TDI diesels. Lots of them.”

    “Great. We’ve got engines. What else?”

    “Routan rear hatches. I don’t know who ordered those but we have several hundred thousand.”

    “Great. We have rear hatches. What else?”

    “Lots of 5x205mm type 1 bus wheels.”

    “Ok. We’ll use those. What else?”

    “We have a few hundred thousand ‘thing’ windshields.”

    “Ok. We have windshields. What else?”

    This new Golf should be one helluva car. Johnny Cash’s “One Piece At A Time” is playing in the back of my mind now.

    • 0 avatar
      NMGOM

      WhiskeyRiver – – –

      Beautiful. I laughed my….uh, posterior…off! (^_^)
      (What’s even worse: I wouldn’t put it past them either…..)

      =====================

  • avatar
    bullnuke

    The new standard-model 2017 Golf. Available options include:

    Radio
    Heater
    Passenger-side windshield wiper
    Passenger-side sun visor
    Passenger seat
    Rear seat
    Roll-down rear windows
    Spare tire

    • 0 avatar
      matador

      It has been confirmed that the spare tire will be standard equipment. They need it to power the windshield washers

    • 0 avatar
      Ko1

      Instead of a fuel gauge, owners will be provided a handy dip stick for the gas tank incremented in liters on one side and US gallons on the other.

      • 0 avatar
        Lorenzo

        The early 1960s bug didn’t even have that. There was a handle under the dash that would be pointed down when you filled the tank. When full, you would turn the handle to horizontal to trap 3 “litres” of fuel in an upper chamber.

        When the engine sputtered and died from lack of fuel, you turned the handle down to drop the trapped fuel in the tank, and you had enough fuel to reach the next service station.

        A speedometer was the only instrument you needed, with an air-cooled engine that could be removed and replaced in 30 minutes, and for electrical, you used your nose and pulled over before the fire consumed the vehicle.

  • avatar
    redliner

    I guess it’s a good thing that the Golf is such a decent little car, because it’s going to be around for the next 10 years with minor “redesigns” more akin to facelifts.

  • avatar
    seanx37

    So weird to me that VW is in such trouble for faking emission tests. GM killed 140 people, and lied for more than a decade. And they got a fine. No one cared for longer than 5 minutes.

    • 0 avatar
      JohnTaurus_3.0_AX4N

      So, do we just make up crap when our precious VAGgy is having a bad hair day?

      You people kill me with this crap. Why only make it up to be 140? Why not 240? How about 240,000? One lie is just as wrong as the next, so lets just make it an even 500,000 people GM went out and strangled and beat to death in front of their children for fun. I bet they killed the kid’s mentally retarded puppies too, huh?

      And, instead of pushing a month or so up to a decade, why not make it 50 years? Doesnt matter if its made up BS. What ever gets us off the subject of VAGacilin’s big @$$ f’up, right? I guess since its okay for VAGina to lie and cheat, its perfectly okay to lie and cheat when attempting to deflect from the bad news concerning them, right?

      So very stupid.

      • 0 avatar
        seanx37

        Excuse me…130 confirmed deaths. I rounded up. GM still knew for more than a decade there was a serious problem and did NOTHING. They lied about a problem and covered it up. That is negligent homicide in most places. Also conspiracy, and probably RICO violations. And nothing happened except fines. VW lied about emissions. No one died. Or was even that damaged.

  • avatar
    Speed3

    VW has a lot of cash on hand and other assets, it will be fine.

    One point that hasn’t been discussed is that this issue will now take up a huge part of resources from the company to fix as well as bandwidth from top executives and engineers.

    This is a huge distraction for a lot of people at VW. I bet a lot of top managements have had the entire roles change and old projects shelved.

    • 0 avatar
      WhiskeyRiver

      The notion that VW has lots of cash and assets and therefore will be fine is underestimating world governments and their desperate revenue positions.

      Deep pockets and what appears to be a “up yours – we don’t need to comply” attitude is going to cost them. Big.

      Do you thing Greek regulators aren’t licking their chops over this? Italy? Name your nation, they’re all going to want a piece of this one.

      Then there’s the lawyers. Loyal buyers were deceived and likely financially hurt by this.

      Add to this that their reputation is now tarnished. As pointed out above, potential customers are going to be wary regardless of the powerplant in the cars.

      I can’t imagine that 5 to 10 years from now, VW will be anything but a tiny shell of what they are today.

  • avatar
    Davekaybsc

    If VW wants to seriously compete in the US, they need to replace the Tiguan with something competitive and viable. See the Mazda CX-5 for a guide on how to compete with the CR-V juggernaut. Diesels are not that big of a deal here, and as good as it is, neither is the Golf.

    VW’s Diesel problem is mostly a ROTW problem, and to the ROTW – maybe Diesel aint as great as you thought it was. Just ask the Parisians.

    • 0 avatar
      NMGOM

      Davekaybsc – – –

      Now that you bring it up, France has outlawed ALL new diesels.
      It makes me wonder if their own independent testing revealed that diesel emissions were not as stated, and that those emissions were varying all over the map.
      Maybe they were too courteous to let VW know, so as not to offend them, since VW also sells a lot of other vehicles in France…

      =============

  • avatar

    In 2006 US Government’s debt was 8 trillion. 9 years later it is 18 trillion. Did US Government freeze promotions and cut bonuses and useless programs?

    • 0 avatar
      28-Cars-Later

      Its almost as if they *want* to run it off the rails. Wait…

    • 0 avatar
      Lorenzo

      Not to worry – much of that borrowed money came from the Federal Reserve, which bought the treasury bonds with freshly printed currency. Normally that would mean rampant inflation, but they called it “quantitative easing” and “fiscal stimulus”, so there was no inflation.

      • 0 avatar
        28-Cars-Later

        Its all going to come crashing down at the current rate, unfunded liabilities are something like 100T. What is the actual value of the whole nation’s assets? 10T? 30?

        I think *they* think if everyone else’s comes crashing down too it won’t be as severe to them and sets things up for a fiscal reset in the form of: SDRs from IMF. What I think *they* underestimate is the growing power of Shanghai Cooperative Organization (SCO) which is really name for the new Eastern Bloc + Middle East. Look at the moves being made right now in Syria and rumored to be Northern Iraq and witness the new sphere of influence being wielded. Did you know both Netanyahu and the Saudi defense minister have met with Putin recently? Did you also know Lavrov met with the Saudis last year? Did you know neither group paid any attention to Moscow a few years ago?

        http://www.cnn.com/2015/09/21/world/russia-israel-netanyahu-putin-meeting/

        https://www.rt.com/news/318324-putin-saudi-goals-syria/

        http://english.alarabiya.net/en/News/middle-east/2014/06/20/Official-Russia-s-Lavrov-to-hold-Syria-talks-in-Saudi-Arabia-.html

        Things are already shaping up to be a two sided world once again except this time the West will certainly be on the lesser end. Nuclear weapons allow for political cliques to be created be they East, West, South, or North and they cannot be effectively challenged. You cannot get rid of the Soviets or the Chinese and any real attempt of color revolution has the real chance of going 1962 all over again. We have to accept we are in competition with this/these bloc(s) and we have to stop committing cultural and financial suicide in order to kick the status quo a bit further. Chess not checkers Soetoro/Biden/Kerry/Rice/Carter/Brzezinski. Idiots. You let a dilapidated Soviet gov’t and military outwit you. Your predecessors spent $8T to invade and occupy a country and you pull out to create ISIS? This was the genius plan? I could craft better foreign policy on the back of a napkin.

        Know why House of Cards is so popular? Its the same reason West Wing was on for too long. Both shows portray a President opposite the actual one. So in West Wing it was carry over Clinton feel good crap as the world changed. Now its a President with actual brains and balls, two things which are lacking at 1600 Pennsylvania Ave these days (if we don’t count Michelle).

        • 0 avatar
          April S

          “with actual brains and balls, two things which are lacking at 1600 Pennsylvania Ave these days (if we don’t count Michelle).”

          I don’t quite understand what you are saying about Mrs. Obama.

          Care to clarify?

          • 0 avatar
            JohnTaurus_3.0_AX4N

            What’s not to understand? She had the balls and brains to get herself barred from practicing law, and she had the balls and brains to turn school lunches into something that makes a can of wet cat food look tasty by comparison.

            She even had the balls and brains to say that the first time she has EVER felt proud to be an American was after her husband was elected president. I guess she was proud that the nation was stupid enough to hand the keys over to a “community organizer” (whatever the hell that is) with no real experience and with the attitude that this country should be taken down a peg or two (or three, or 50). Maybe she was proud of the fact that she and her husband could force whatever crap they liked down the throats of Americans, and pretty much no one would question it, lest they be called a racist that clings to their guns and religion.

          • 0 avatar
            30-mile fetch

            http://www.factcheck.org/2012/06/the-obamas-law-licenses/
            http://www.snopes.com/politics/obama/lawlicenses.asp

            And John, do you see the irony in criticizing someone for stating that they haven’t been proud of their country the sentence before you state that this country was “stupid”? You two have more in common than you think!

            #michelleobamataurus_3.0_AX4N

        • 0 avatar

          “I think *they* think if everyone else’s comes crashing down too”

          That is true. Europe will crash first and debt in Japan is even worse. China will go into depression as a matter of fact – nobody doubts about it. What left? Russia, Brazil – you know answer already. So US bonds will be the safe heaven for almost forever until Climate change destroys planet but before that we all will move to another Galaxy – closer to the black hole so black hole will be even worse than US debt. American ingenuity – accumulate unlimited debt since the rest of world are welfare or failed states and fares worse.

  • avatar
    OldandSlow

    There is also the fact that there are too many brands in the VW portfolio. Except for the Persian Gulf countries – are Bugatti or Ducati really that essential to VW’s core business?

    Rolls and SEAT are two additional brands that could be spun off or in the case of SEAT merged with Skoda.

  • avatar
    brettc

    VW had their national dealer meeting last week in Orlando, and according to a post on TDI Club some sort of announcement will be coming this week about affected U.S. cars and compensation. There was mention of gift cards and some sort of amount of cash to get people out of the cars that have problems. So we’ll see. Either way it’s gonna be pricey for them.

  • avatar
    JimothyLite

    VW to freeze promotions, with
    Matthias Müller as Snow Miser! Get that man a straw hat!

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