Volkswagen AG ’s efforts to right its U.S. business were upended on Wednesday when one of its longest serving and most successful executives quit in a dispute over organizational strategy, deepening management turmoil resulting from the company’s emissions scandal.
Winfried Vahland, the 58-year-old chief executive of the auto maker’s Skoda Auto business and CEO-designate of a new organization that would group its U.S., Canadian and Mexican operations, resigned abruptly. The 25-year Volkswagen veteran couldn’t agree with top executives on a plan to overhaul the U.S. business after weeks of intense negotiations, people familiar with the matter said.
“Differences of opinion over how to shape the new corporate region led to this decision,” Skoda said in a statement, adding that his departure wasn’t related to the diesel-emissions scandal weighing on the company and its U.S. business. The company has acknowledged using software to dupe U.S. emissions tests of its diesel-powered cars between 2009 and 2015.
Mr. Vahland also had personal reasons to turn down one of the company’s top jobs. He was passed over for CEO of Volkswagen last month. The post went instead to Matthias Müller, who had been head of the company’s Porsche sports-car business. After years of senior posts, including substantial foreign travel, Mr. Vahland and his family weren’t enthusiastic about relocating to the U.S., people close to him said.
“After being passed over for the CEO’s job, it was kind of like reaching the end of his career,” a person close to Mr. Vahland said. “So now he wants to take time and think about his future.”
Volkswagen has always been more than a car. It occupies a special place in German society. WSJ’s Dipti Kapadia goes through some of the iconic moments for the German auto maker, now caught in a scandal over emissions. Photo: Getty Images
Mr. Vahland, who was credited with turning Volkswagen’s China operation into a powerful profit center, took the helm at Czech Republic-based Skoda in 2010. Over the next few years he transformed the former state-owned car maker into one of Europe’s fastest-growing brands. Earlier in his career, he held executive roles at Volkswagen in Brazil and at its Audi luxury-car unit.
The loss of Mr. Vahland is a setback for the car maker at a time when several of the company’s top executives, including former CEO Martin Winterkorn, have resigned or have been suspended amid the diesel-emissions crisis. His resignation was such a surprise that there is no current alternative, people close to the company said.
Volkswagen’s executive bench doesn’t run deep, analysts said. This summer, Volkswagen poached executives from rivals Daimler AG and BMW AG to fill two key jobs. Herbert Diess, a former BMW management board member, is now running the Volkswagen passenger car business, the company’s largest. Andreas Renschler, a former Daimler executive, is in charge of Volkswagen’s truck business.
Last month, one of Mr. Müller’s first acts as CEO was to unveil a sweeping management shake-up that included tapping Mr. Vahland for North America and putting new CEOs atop its Skoda, Seat and Porsche businesses. Discussions about the shake-up had begun earlier in the summer.
Analysts said it would hard to find an insider with Mr. Vahland’s experience and authority to deal with the crisis in the U.S. Until now, the U.S., Canada and Mexico largely operated independent of one another.
Mr. Vahland was charged with building a layer of management on top of these national organizations that would have the country’s CEOs reporting to him instead of top executives in Wolfsburg, Germany. The idea was to improve coordination between three organizations, creating more efficiency and giving the region greater clout with suppliers and with Wolfsburg.
The U.S. organization, run by Volkswagen of America CEO Michael Horn, was concerned that another layer of management could slow decision making at a time when the company needed to quickly implement change, the people said.
U.S. sales gains are pivotal to Volkswagen’s goal of becoming the world’s biggest auto maker by volume. It set a target to sell 800,000 vehicles a year in the U.S. by 2018, despite business setbacks there. In 2014, Volkswagen’s overall sales in the U.S. fell 2% from the prior year.
News of Mr. Vahland’s exit came as Volkswagen’s top 1,000 executives are set to meet Thursday at a Porsche factory in Leipzig, Germany. Though a previously planned routine meeting of top management from across the company’s 12 brands, the gathering is expected to be another in a series of crisis meetings that have been held in the wake of the emissions revelations.
Mr. Müller, the CEO, and several senior Volkswagen executives will address the global executives, and are expected to give an update on the investigation into the crisis.
Volkswagen has hired U.S. law firm Jones Day to conduct an internal investigation into the emissions cheating scandal. The company is also under criminal investigation in the U.S. and Germany and faces hundreds of lawsuits by angry customers and disgruntled shareholders.
At least three senior engineers have been suspended so far, but no one has been charged with a crime. The company has said that only “a small group” employees is believed to be responsible for installing a device that can manipulate emissions tests.
Volkswagen on Wednesday dismissed as “completely unfounded” a report in the German news magazine Der Spiegel that as many as 30 employees were involved in the deception.
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