VW overhauls development process to prevent another diesel scandal

By Christoph Rauwald, Bloomberg News

FRANKFURT, Germany (Jan. 22, 2016) — Volkswagen A.G. is changing the way it creates new models by giving developers more responsibility for overseeing a car from concept through the end of production to help prevent another diesel emissions scandal.

Volkswagen's namesake brand will give development teams control of a vehicle's technology, quality and cost for the first time, the company said Jan. 20 in a statement. That's a departure from the previous development process, which spread responsibility across layers of committees and funneled final approval through top executives.

“We have to ensure that the corporate responsibility for each vehicle project is clearly assigned,” Herbert Diess, chief of the VW brand, said in the statement. “This step represents a core element of ‘New Volkswagen.'”

The German car maker admitted last September that it had deceived consumers and regulators by rigging engines to pass emissions tests since 2009. The company has yet to explain how the deception was originated and maintained for so many years and has hired Cleveland-based international law firm Jones Day to investigate. A report is expected in April.

Volkswagen's four new development teams will focus on vehicle types, including small cars, compacts, mid- and full-size autos and battery-powered vehicles. The reorganization aims to make the brand more nimble as part of a push to rein in spending to offset the costs related to the scandal, with burdens from regulatory fines and lawsuits unresolved.

“We see the current issues as a catalyst for change,” Michael Tyndall, an analyst with Citigroup, said in a note. “Expectations are starting to improve.”

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This Bloomberg News report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.