COMMENT: VW, Pischetsrieder face challenge, charge

5.12.03 COMMENT
Franz Rother is editor-in-chief of Automobilwoche

Last week was not a good one for Bernd Pischetsrieder, chairman of Volkswagen group, Europe's largest automotive manufacturer.

Last Wednesday Pischetsrieder announced that in the first quarter of 2003, VW's profit before tax fell by nearly 67 percent to 331 million euros. He blamed the strong euro and the development costs for new models.

And last Friday Pischetsrieder was informed that an attorney has brought a charge against him and his predecessor Ferdinand Piech, who is now chairman of the VW supervisory board. The accusation: professional fraud.

A few years ago, the attorney's efforts were instrumental in forcing Audi to retrofit its TT sports car with a rear spoiler after claims of instability. Now the attorney is alleging that VW knowingly sold vehicles with engines that contained significant faults in construction to thousands of buyers of VW-, Seat- and Skoda-brand vehicles.

In the future, Pischetsrieder also has to find a way of protecting VW from the risks of fluctuating exchange rates. The group reputedly loses 38 million euros of profit before tax with every cent the euro rises against the dollar. With that in mind, the idea of constructing of a VW plant in the USA might make sense again.

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