By on December 10, 2015

Matthias Müller

Volkswagen announced Thursday that the automaker’s investigation had identified institutional breakdowns and individual misconduct that led to the installation of more than 11 million “defeat devices” aimed at cheating emissions tests in its diesel cars.

Volkswagen Chairman Hans Dieter Pötsch told journalists and investors that some parts of the company “tolerated breaches of rules” while it developed the illegal devices, according to Automotive News.

Thursday’s announcement was an interim report on the internal investigation by Volkswagen that has already resulted in nine suspended employees, including a high-ranking engineer who was with the automaker for 30 years. Pötsch said the external investigation, which will be conducted by U.S. firm Jones Day, will continue well into 2016.

Pötsch confirmed that the illegal software installed into Volkswagen’s EA189 diesel engines that reduced performance in order to comply with emissions tests was developed by the company to meet stricter U.S. standards — even though the engines couldn’t comply.

The Volkswagen chairman said that engineers, rushed to bring to market a U.S.-compliant engine under budget and on time, developed the cheating software. The cheat wasn’t a one-off mistake, rather a “chain of mistakes,” according to Automotive News.

Despite a worldwide scandal affecting millions of cars, Volkswagen emphasized that the work of individuals was to blame for the defeat devices that have cost the company billions already.

“It is clear that, in the past, deficiencies in processes have favored misconduct on the part of individuals,” the company wrote in a statement Thursday.

Volkswagen said it would make more transparent the engineering in its cars, and said, for example, that ECU management software would be reviewed four times before being installed.

Pötsch said that the “investigation is producing valuable findings, which will help us create a structure that, rather than favoring breaches of regulations, will prevent them, or at least allow them to be detected early on,” according to the automaker.

Volkswagen hasn’t revealed how its cars in the U.S. will be brought into compliance with emissions standards, but said Thursday that it would a bigger “technical challenge” to fix cars in the States. Volkswagen said it would begin recalling cars in Europe starting in January, beginning with the 2-liter engine.

New Volkswagen CEO Matthias Müller said that the group would draw heavily on sources outside Germany to help bring the brand back from the diesel scandal. The automaker is planning a digital and electrification “offensive,” according to the automaker. Müller called for new ideas at the group:

We don’t need yes-men, but managers and engineers who make good arguments in support of their convictions and projects, who think and act like entrepreneurs. I am calling for people who are curious, independent, and pioneering. People who follow their instincts and are not merely guided by the possible consequences of impending failure. In short: the future at Volkswagen belongs to the bold. We need a little more Silicon Valley, coupled with the competence from Wolfsburg, Ingolstadt, Stuttgart, and the other Group locations.

According to Automotive News, Müller hinted that the group may not be preparing to sell off some of its brands such as Ducati, Bugatti, Lamborghini or heavy truck maker Scania.

“There is no reason whatsoever to get rid of these assets,” Müller said, according to the report. “We are looking forward to the future of VW. We want to make this company more modern, more open.”

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14 Comments on “‘Weak Points’ Led To Widespread Volkswagen Cheating, Says Top Execs...”

  • avatar

    Did something get lost in the translation? “…the work of individuals was to blame…” What does that even mean? ”

    Who was putting the pressure on the engineers to do what was, at the time, impossible?

    • 0 avatar

      Management 101 teaches you that if there’s a widespread problem, it’s not the fault of the individuals. It’s the fault of the leadership that allows such enables such an mentality.

      Perhaps these individuals needed to be faulted, but that doesn’t alleviate fault from those responsible for the culture (the very top).

  • avatar
    Waftable Torque

    A lot of corporations have systemic issues because their incentive structures encourage it.

    Former EIC Bertel Schmitt had a great article on Bernd Gottweis’s role within the old VW, and how removing of the internal checks and balances can lead a company to disaster.

  • avatar

    “It is clear that, in the past, deficiencies in processes have favored misconduct on the part of individuals,” the company wrote in a statement Thursday.

    Well, thank you Captain Obvious.

    Herr Pötsch has now assuaged all of my misgivings about the company.

  • avatar

    “… the automaker’s investigation had identified institutional breakdowns and individual misconduct… ”

    No mention of any top level managers, outside of engineering, being blamed.

    Who gave the OK to order the software from Bosche?
    Who said to make the diesel engine technology compliant?
    Who allowed it to happen for years?
    When did engineers truly have the Proper Authority to do those things such as the Q’s above?

    More scapegoating by VW management.

    • 0 avatar

      -Who gave the OK to order the software from Bosche?
      The formal order would almost inevitably be given by somoene without even a fraction of a clue. Even in Germany, where C-suite cluelessness is much less widespread than in the Anglo world.

      -Who said to make the diesel engine technology compliant?
      Pretty much anyone, from regulators, to marketers, to execs….. Not compliant => not sell. Aside from the engineering side; again, none of the others would have even a fractional clue about whether it would be feasible to make an existing platform compliant (cheap), or a brand new one would have to be developed. Bold, Silicon Valley like hubris won out……… Along with a too strong desire to please, instead of telling the suits to either pay what it takes, go stuff it.

      Who allowed it to happen for years?
      Formally, everyone from engineering and up. In a company the size of VW, there are probably about 10 layers of gunk gumming up the communications channels between a too-clever-by-half engineering team, and anyone who pays attention to “risks to the brand” type stuff.

      When did engineers truly have the Proper Authority to do those things such as the Q’s above?
      Anywhere complex products are made, they implicitly do, regardless of formal structures. Silicon Valley works because fixing an f-up takes a bit of recoding and pushing of version 1.1. While making customers hole, may require digging up and merging some data from backup. The car business is, and not necessarily for the better, different. Google style “just work on whatever excites you and maybe it will turn into a business” doesn’t really translate to autos. I’m actually surprised, assuming there really is much beyond bureaucrats trying to make a name for themselves in this, that a large, established German automaker would let “innovators” fly free enough to pull this off.

      More scapegoating by VW management.
      Honestly, more cluelessness is a more accurate description. i have no doubt there are, within VW management, people with plenty of authority to say no, who are charged with minimizing the chance of scandals like this unfolding. It’s just that there are too many possible things that can go wrong in an organization and product mix that complex. And those guys were likely looking at other things than some software that worked perfectly well, until it one day didn’t. Also, over the past decade or more, the whole “be bold” mantra has swept Europe to the point where just being like Toyota is derided as “lagging” and “falling behind.”

  • avatar

    Corporatize the profits, and individualize the blame.

    Don’t for a second think that the global corporation you work for gives one whit about you.

  • avatar

    Interesting how this dovetails with a segment on Marketplace yesterday regarding corporate whistleblowers and their point that whistleblower protections are particularly weak in Germany. The reported said 90% of corporate whistleblowers try to bring up the issue to management first, before becoming a “whistleblower”. From the look of it, no engineer in his/her right mind would have tried to raise this to VW management if he valued their job, especially since the government policy is not protecting you either. Better to bite your tongue. Result: multi-year, multi-million dollar cover up.

  • avatar
    John Horner

    Not once did he talk about a fundamental failure of the executive management team. He blames the engineers for cheating instead of working harder, but makes no mention of the engineers being given impossible objectives:

    Executives: “Find of way to hit the tough US NOx standards without using UREA injection”.

    Engineers: “We tried many things, but that seems impossible with current technology”

    Executives: “Work harder.”

    Repeat steps about many times until finally –

    Engineers: “We found a magic solution.”

    Executives: Don’t bother me with the details of your solution, but good job.

    Years later: “The engineers cheated because they were too lazy to do their jobs correctly.”

    Remember that the vast majority of people who become big company executives are skilled spin-masters and corporate politicians.

    • 0 avatar

      The last day in Engineering school, my mentor and I had a great heart-to-heart where he taught me the most important lesson I learned in college.

      * Always keep your priorities straight and never tell your employer what those priorities are: 1) You and your family 2) Society 3) The profession 4) Your career and 5) The company. *

      I think we see that order totally reversed quite often (e.g. in your example). I was once faced with the exact scenario you detailed, when a senior manager criticized me quite publicly for failing to deliver a solution that one of our competitors was delivering. Though quite scary, I told him to go screw himself and was lucky enough to have my superiors back me up. That competitor was sued by the EPA shortly thereafter, then ordered to stop production, lost their CEO, etc…

  • avatar

    So many inconsistencies in everything VW is putting out. Everything I am reading from them is dissembling, or just plain dissonant.

    I don’t think having 4 code reviews instead of one (or none?) is going to change the culture or management style within VW.

    Also, I didn’t think they announced a fix for the 2.0 in Europe, only the 1.6 — how are they going to fix that starting in January?

    Curious to know what their sales number are looking like in Europe and Asia, probably not as bad as they are here.

  • avatar

    Another week, another lie….. my shadenfreude towards them is at an all time high. I have no sympathy for them whatsoever.
    A lot of honest Germans must be taking this personally.
    Probably one of the best books that describes what took place at Volkswagen: Martin Wehrle: “Ich arbeite in einem Irrenhaus” – I work in a madhouse.

  • avatar

    VW had the goal of becoming the largest volume automotive company in the world. It even looked like they were ahead of schedule. Executives most likely were told that they (engineers) couldn’t hit emissions goals without reallocation of recourses. That reallocation combined with engineering delays would interfere with VW’s global top dog goals. Hubris is a bitch.

  • avatar

    Rant on.

    What the hell is it with everyone, when caught doing something illegal, immoral of just plain stupid, explaining their way out of trouble by saying “Opps, I made a mistake”. A mistake is putting on miss-matched socks in the morning in dark or picking up the wrong set of car keys when going out the door. The reality is that these people made a conscious decision knowing full well that what they were doing would break the law or cause injury of loss to someone else. I can somewhat understand some low IQ, mouth breathing fool using that excuse. But for a highly paid and educated “corporate leader” to make such a statement puts me in a rage.

    Rant off.

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