VW's billionaire owners to face workers for first time since scandal broke
S&P downgrades VW's credit rating
FRANKFURT (Bloomberg) -- Volkswagen AG’s billionaire owners are set to break their silence on Wednesday, more than two months after the carmaker’s admission to cheating on emissions tests, in a bid for workers’ support as the company seeks a path out of the scandal.
Wolfgang Porsche, chairman of family-owned majority shareholder Porsche Automobil Holding SE, will address thousands of workers in hall 11 of Volkswagen’s huge factory in Wolfsburg, Germany. He’ll be flanked at the morning staff meeting by the other three supervisory board members who represent the reclusive clan: Louise Kiesling, Hans-Michel Piech and Ferdinand Oliver Porsche.
The Porsche-Piech family has been asked by labor leaders to signal their commitment to workers, now facing two weeks of forced leave during the Christmas holidays as the crisis begins to affect sales. Labor chief Bernd Osterloh, who has pushed to shield workers by focusing cutbacks on Volkswagen’s model portfolio, will host the assembly.
"I am firmly convinced that the city of Wolfsburg together with Volkswagen will master the situation and gain further strength," Wolfgang Porsche said in a statement issued today by the city. "The Porsche and Piech families stand behind Volkswagen and Wolfsburg as its headquarters."
It comes amid mixed news for Volkswagen: though the company has made progress toward a simpler-than-expected recall of 8.5 million rigged diesel cars in Europe, plummeting U.S. sales show the impact of the crisis on the showroom floor.
Also today, ratings agency Standard & Poor's downgraded Volkswagen AG's credit rating a notch from "A-" down to "BBB+" with a negative outlook. VW remains two notches above S&P's lowest investment grade rating.
"The downgrade reflects our view that VW's manipulation of engine emissions exposes the group to material, wide-ranging adverse credit impacts," S&P said in a statement, noting the multiple financial risks faced by the automaker.
"In our view, these events have tarnished VW's reputation and brand perception, and will negatively affect the group's market position and competitive advantage.
Chairman Hans Dieter Poetsch, the former chief financial officer and a close confidant of the families, plans to attend Wednesday's event as well, as does Frank Witter, his successor as CFO. Wolfgang Porsche is also due to speak at an annual gathering with the mayor of Wolfsburg, Volkswagen’s headquarters city this evening.
“The owner families have been very discreet so far amid this unprecedented crisis for the company,” said Yasmina Serghini-Douvin, a Paris-based analyst for Moody’s. The meeting will show where the family stands with the labor force, she said, “an important indicator for the company’s plan to accelerate reforms and improve cost efficiency.”
Wolfgang Porsche's reticence to get publicly involved has been true to form.
The soft-spoken 72-year-old was thrown into the forefront earlier this year, after his cousin, former Volkswagen Chairman Ferdinand Piech, resigned in a boardroom fight with then-CEO Martin Winterkorn. Porsche was the last of the company’s power players to weigh in behind Winterkorn in that struggle, holding off on entering the fray until after consulting with other family members.
Unlike Piech, who spent his career in boardrooms, engineering centers and assembly halls, Wolfgang Porsche has mostly lived quietly in Austria, spending time in Salzburg and the Alpine town of Zell am See. There he has an organic dairy farm.
Much of the rest of the 30- to 40-person family also keeps a low-profile, living around the border of Germany and Austria. They control 52 percent of Volkswagen’s voting stock through Stuttgart-based Porsche Holding, a relic of sports-car maker Porsche’s ill-fated attempt to take over much-larger Volkswagen.
The bigger company turned the tables in a complex transaction that ended with an agreement in 2009 to have the Porsche-Piech family as anchor shareholder, while the sports-car operations were integrated into Volkswagen’s stable of brands.
The family’s silence has exacerbated insecurity among workers as evidence grows that the emissions manipulation is starting to hurt sales. Volkswagen’s U.S. deliveries dropped 25 percent in November.
The carmaker is putting production in Wolfsburg on hold for two weeks over Christmas to avoid bloated inventories. The factory is VW’s largest and one of the biggest car-manufacturing locations in the world. It produced about 840,000 vehicles last year, but sustaining output could be a struggle if demand continues to slide.
Volkswagen’s admission to posting manipulated readings of carbon-dioxide emissions for as many as 800,000 cars in Europe has particularly caused “purchasing restraint” among customers, Osterloh said Friday.
In one bright spot for the company, technical fixes for cars in Europe have shaped up to be less complex and expensive than initially feared. But talks with U.S. authorities haven’t finished, and Volkswagen still faces lawsuits and what are likely to be billions of euros in regulatory fines.
Wolfsburg Mayor Klaus Mohrs said he hoped the city could work on a strategy to promote electric cars with Volkswagen to create a model town and "pave the way for a new era of mobility."
Volkswagen CEO Matthias Mueller said the emissions issue was a catalyst for change.
"We have to reorientate ourselves to stay relevant in the future. For Volkswagen, but also for Wolfsburg, I am confident that this can succeed and will succeed," he said.
Automotive News and Reuters contributed to this report.
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