A Volkswagen spokesman has reportedly denied a German newspaper’s claim on Tuesday morning that the company is replacing CEO Martin Winterkorn with the head of its Porsche sports car business, Matthias Mueller.
However, PR pros say a change at the top is exactly what the carmaker needs to do to salvage its reputation.
Volkswagen’s stock was down big on Monday morning and again on Tuesday, days after Winterkorn apologized for Volkswagen diesel cars having software installed that helped them cheat US emissions regulations. Initially, the company said less than 500,000 diesel cars in the US included equipment designed to mislead emissions testers and needed to be recalled. However, that number grew to 11 million cars worldwide as of Tuesday morning.
Cheating on this scale goes to the very heart of Volkswagen’s credibility and exposes questionable ethics in the company’s C-suite, explains Ashley McCown, president of Solomon McCown & Company.
"If the news of Martin Winterkorn being replaced is true, it is a step in the right direction and sends a strong and immediate message that this level of cheating and deceit will not be tolerated," she says.
Yet if Volkswagen has not decided to replace Winterkorn, it’s hard to see how he survives the scandal, adds Nick Kalm, founder and president of Reputation Partners.
"Perhaps the company should wait to terminate him until the investigation is complete, but they will have to do a lot more then to show they are deserving of restored trust," he says.
Volkswagen says it has set aside $7.3 billion to cover the costs of the recall. Meanwhile, customers are telling media outlets they feel duped by Volkswagen’s claims of environmental friendliness and superior technology in its diesel cars.
Peter Himler, principal of Flatiron Communications, concurs that Volkswagen must take tangible action to put the crisis behind it and punish those involved, no matter how high up the food chain they are.
In addition to housecleaning, McCown says the CEO must immediately come clean with everything, with no more "hedging or hiding."
Kalm, however, lauds Winterkorn’s decision to immediately take personal responsibility and apologize. Yet he adds that the mea culpa is widely being seen as an admission of guilt.
Volkswagen’s highest ranking executive in North America used blunter language on Monday night, telling the audience at a New York City launch event, "We screwed up."
Typically, this would suffice in getting the company past the harsh media spotlight, Himler says. Yet Volkswagen’s situation is so dire, a few press releases and statements of contrition won’t cut it.
"Keep in mind, the EPA will soon make another wave of news when it reveals the details of its fine," he adds. "In addition, the Justice Department now intends to review the matter. I don't think Volkswagen’s problems will dissipate anytime soon, absent a meaningful change in leadership and practices."
Volkswagen should place the company's senior-most engineering executive on paid administrative leave, pending the outcome of the investigation, recommends Kalm.
"Letting [that person] continue to oversee that critical function will likely give rise to questions about anything else that department touches moving forward," he explains. "In addition, the company should commit to passing any upcoming submissions to any regulatory body through a credible third-party review before submitting them, pending the outcome of the investigation."
Here’s what PR pros have been saying about the scandal on Twitter:
Textbook work by VW's PR department in face of US emissions cheat fiasco. I'm not sure it's quite enough though https://t.co/htmhgKYFw4— Mike van Dulken (@Accendo_Mike) September 21, 2015
Wonder if this will cut it? RT Volkswagen CEO sorry for 'broken trust' - CNN https://t.co/wal8OUtUXo— Tom Kramer (@Tom_Kramer) September 21, 2015