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Thursday 8 December 2016

Volkswagen's US chief 'ousted over management clashes'

Published 11/03/2016 | 03:51

Former Volkswagen of America boss Michael Horn gives evidence to the US government about the firm's emissions-rigging scandal (AP)
Former Volkswagen of America boss Michael Horn gives evidence to the US government about the firm's emissions-rigging scandal (AP)

Volkswagen's US supremo was ushered out of his job for clashing too often with the troubled German car maker's headquarters as he tried to keep sales afloat before and during the diesel emissions-cheating scandal, a dealer has said.

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Michael Horn, VW's US president and CEO, was the firm's public face when the scandal broke in September, calmly enduring a two-hour grilling from a congressional sub-committee.

The clashes included German executives resisting Mr Horn's plan to give diesel owners 1,000 dollars' worth of gift cards and vouchers to buy goods at dealerships as a gesture of goodwill, said Alan Brown, head of VW's National Dealer Advisory Council.

Mr Horn's sudden departure comes as the company faces a March 24 deadline from a federal judge to get government approval of plans to fix the polluting diesel cars. It also drew anger from US dealers who fear the company will back out of promises made under Mr Horn's tenure.

VW is negotiating with US and California regulators to fix nearly 600,000 cars sold in America with software designed to cheat on emissions tests.

The cars emit as much as 40 times the allowable standard for nitrogen oxide, which can cause respiratory problems. VW has admitted the cheating and will probably have to recall most of the cars for repairs.

Mr Brown, a dealer in Texas, said he was told by Herbert Diess, chairman of the Volkswagen car brand, that German management wanted to move Mr Horn out of the US but was willing to give him another top job in the company.

Mr Horn, who was upset that VW brought in an executive above him in North America, told VW employees that he decided to instead to leave, according to a former worker.

The ex-employee, who did not want to be identified for fear of retaliation, also confirmed the clashes with management.

According to Mr Brown, Mr Horn also differed with superiors at VW's headquarters in Wolfsburg about vehicles to be sold in the US and what prices to sell them at.

Mr Horn wanted more SUVs and cars more suited to the American market, but his superiors often disagreed, according to Mr Brown.

"When he ran into situations like that, he would go unplugged," Mr Brown said.

The dealer council said in a statement that during his two years in the job, Mr Horn was able to secure commitments of better products for the US and repair fractured relations with dealers "which had been eroded for decades by failed promises of success from Volkswagen AG".

Mr Brown said the dealer network was "hanging on by a thread," and some could file class-action lawsuits over economic damage caused by VW's conduct.

He warned Mr Diess and other executives in telephone conversations not to change the product plan or commitments that Mr Horn made to help dealers.

"You start messing with that, and we have big problems," said Mr Brown, who will meet executives in Germany at the weekend.

In 2007 VW set a goal of selling 800,000 of the brand's vehicles in the US, with diesel engines a big part of that growth. But VW had trouble meeting tough American diesel pollution standards.

The brand made it to 438,000 in 2012, but sales began to falter. Last year they hit just over 349,000, and so far this year they are down almost 9%.

VW spokeswoman Jeannine Ginivan would not comment on the circumstances surrounding Mr Horn's departure. The company said on Wednesday that Mr Horn was leaving to pursue other opportunities.

Ms Ginivan also would not say if VW would meet the March 24 deadline to have a fix in place. VW has continued to meet regulators, but neither side has given any indication they are near agreement.

VW potentially faces more than 20 billion dollars (£14bn) in US fines, as well as hundreds of class-action lawsuits from angry vehicle owners. The company also is facing a US criminal investigation.

Mr Horn was sent to apologise to consumers at the congressional hearing in October. But at the same time, he told politicians that top corporate officials had no knowledge of the cheating software installed in 11 million diesel cars worldwide.

"To my understanding this was not a corporate decision, this was something individuals did," Mr Horn said, adding that he felt personally deceived.

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