Michael Horn, CEO of Volkswagen America, met with an incredulous response from several U.S. lawmakers Thursday when he testified that the German automaker’s emissions cheating scandal was the work of a handful of rogue employees, not a high-level corporate conspiracy.
But some auto industry insiders say it’s not inconceivable that senior management could have been ignorant of the details of the cheating, even as they instilled the corporate culture that led to the subterfuge.
ANALYSIS
Horn, testifying before the House subcommittee investigating Volkswagen’s rigged software that enabled its four-cylinder diesel engines to cheat on emissions testing, said the so-called “defeat device” was the work of “a couple of software engineers who put this in for whatever reason.”
"This was not a corporate decision,” he later added. “There was no board meeting that approved this.”
Among the committee members expressing skepticism over Horn’s account was Rep. Chris Collins, a New York Republican, who told the witness he believes the scandal is the result of "a massive cover-up at the highest levels that continues to this day."
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Could a handful of “individuals,” in Horn’s words, really have taken the steps necessary to install the software into 11 million diesel-powered vehicles, including 482,000 sold over the last seven years in the U.S.?
The significance of the action becomes more apparent when one realizes diesels account for about half of the VW sales in Europe, and a quarter in the U.S. In both cases, the vehicles would have been banned from the roads for failing to meet emissions standards.
Some automotive industry insiders say it’s possible, given the corporate culture at VW, that senior management could have set the tone that made such a scheme possible -- even necessary – without knowing the details of how it worked.
David Cole, a veteran of the auto industry and chairman-emeritus of the Center for Automotive Research, in Ann Arbor, Michigan, is among them, saying he strongly doubts the cheating was directly ordered by top Volkswagen officials.
“They just don’t do this,” said Cole, adding that senior managers would know that if the details of such a scheme were to be leaked, “The cover-up would be worse than the crime.”
That said, Cole suggested that top management might not be entirely innocent. “You have to understand the German culture,” he added. “They’re used to getting what they want.”
Under the scenario posited by Cole and other industry insiders, while there may have been no direct order from the top to orchestrate the cheating, it is possible – even likely -- that the team charged with developing the EA 189 engine knew that failure was not an option. And that would have left them only one option when it became clear they could not deliver the seemingly impossible blend of good performance, high mileage and low emissions that had been promised.
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The success-or-else philosophy at Volkswagen dates back at least to the time when Ferdinand Piech, who retired earlier this year as Volkswagen AG Chairman, was appointed CEO in 1992.
That year he hosted a small group of reporters, including this correspondent, at VW’s Wolfsburg, Germany, headquarters, inviting them to look at a prototype of a new sedan that was intended to leapfrog all competitors. After explaining the long list of new features and technical breakthroughs he wanted, Piech was asked what would happen if the engineering team said they couldn’t deliver.
“Then I will tell them they are all fired and I will bring in a new team,” Piech, the grandson of Ferdinand Porsche, founder of both Porsche and Volkswagen, declared forcefully. “And if they tell me they can’t do it, I will fire them, too.”
That management tone has been a clear factor in the way Volkswagen has been run in the intervening decades, even after Piech moved into the chairman’s role, replaced by his hand-picked – and equally driven – successor, Martin Winterkorn. Winterkorn resigned on Sept. 23, just five days after the scandal became public, but said he did not have knowledge of any wrongdoing.
Exactly who was aware that the engineers and software programmers directly involved in the diesel project were cheating? That’s likely to take some time to answer. But to CAR’s Cole and many observers, top VW managers set the tone, whether they are legally culpable or not.
Either somebody was "asleep at the switch or incompetent, or it was a massive cover-up, which I think it is.”
But Collins, the New York congressman and himself a former engineer, told TheDetroitBureau.com in an interview late Thursday that he finds it "inconceivable" that such a complex plan could have executed by a few lone wolves, especially considering the extreme importance of the diesel engine to VW.
Recalling his own work helping develop a high-efficiency electric motor for Westinghouse Electric in 1977, Collins said he believes top managers would have been closely watching the project, and would have demanded to know how the development team was able to meet the emissions threshold after multiple early failures.
Another expert who doubts Horn's explanation is Arvind Thiruvengadam, a researcher at West Virginia University who was part of the team that found Volkswagen's diesels were in violation of U.S. emissions standards. Asked if Horn's explanation made sense to him, the assistant professor said simply, "I doubt it."
Like Collins, Thiruvengadam said the addition of the cheating code to the vehicles' emissions controls would have been too complex for a few individuals to pull off.
Collins also faulted VW's internal investigation, saying it should have taken the automaker "four hours" to get to the bottom of the scandal and find out who knew what and when, not the months they say the investigation will take.
Either somebody was "asleep at the switch or incompetent, or it was a massive cover-up, which I think it is,” he said.
In a bid to find out who had knowledge of the scheme, and when, German prosecutors on Thursday raided various VW offices, including the automaker’s headquarters in Wolfsburg.
And in the U.S., the congressional committee has joined a growing list of government agencies trying to find out how high up the Volkswagen command chain knowledge of the cheating extended, including the U.S. Justice Department, the EPA and California air quality officials.
But officials on both sides of the Atlantic have cautioned it will take time to pull together the facts of the case – as VW itself gets its own internal investigation underway.
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