Why VW’s American Dealers Saved U.S. Chief Michael Horn’s Job

Eric Thayer/Getty Images News

Eric Thayer/Getty Images News

The Volkswagen diesel scandal broke on a Friday morning. Despite two cold, brief statements issued from Wolfsburg over that weekend, the company’s overall silence sounded more like an admission of guilt than anything else. Over in the U.S., Volkswagen of America decided to go ahead with Monday’s launch of the 2016 Volkswagen Passat as planned. The launch party was to be your typical big-budget affair: A rented space in the trés-chic Brooklyn Navy Yard, beautiful girls with champagne, a big sleek stage, and a set by Lenny Kravitz to cap off the night. Despite the epic shitstorm surrounding the brand, this was supposed to be a party after all, and the company was going to do its damndest to make that happen.

The assembled crowd didn’t help make the big space feel any smaller. Maybe the no-shows stayed away because this wasn’t the time to be fed hyperbole about a sedan’s mid-cycle facelift by a manufacturer that’s going up in flames like the Hindenburg in slow motion. But when the lights dimmed, and VOA’s chief executive Michael Horn took the stage alone, he did something that no Volkswagen exec had done yet: He apologized.

“As you have seen since Friday, the Environmental Protection Agency has issued a statement, in reality that Volkswagen manipulated engine software in our TDI diesel cars and that we violated emissions standards. The CEO of our parent company, Dr. Martin Winterkorn said yesterday, Volkswagen will fully cooperate with the responsible agencies, and much, much more importantly – as I see it – he stated that he was personally and deeply sorry for this. That Volkswagen has broken the trust of our customers and of the public here in America.

And last he stated that this matter, and I think this is common sense, is first priority for him personally and for the entire board of management. So let’s be clear about this: Our company was dishonest. With the EPA, and the California Air Resources Board, and with all of you. And in my German words: We’ve totally screwed up.

We must fix those cars, to prevent this from ever happening again, and we must make this right. With the government, the public, our customers, our employees, and our dealers. And this kind of behavior – I can tell you with all of my heart – is completely inconsistent with our core values.  The three core values of the brand are value, innovation, and in this context very importantly, responsibility. For our employees, for our stakeholders, and for the environment. So it goes totally against what we believe is right. Along with our German headquarters, we are committed to do what must be done, and to begin to restore your trust.”

After a pause, there was applause, genuine solid applause. Yes it was measured and safe, but the German-born Horn’s remarks were also the first candid human admission of guilt to come from Volkswagen since it all went wrong. By Wednesday, the company’s corporate bloodletting had begun, and among the first scheduled to go was Michael Horn.

 JOHN MACDOUGALL/AFP/Getty Images

JOHN MACDOUGALL/AFP/Getty Images

But now, thanks to the company’s embattled American dealerships, Volkswagen AG has reversed course, and Horn will stay on as the company’s American chief. And despite the embarrassing public reversal, it could be the best decision the company has made all week.

ODD ANDERSEN/AFP/Getty Image

ODD ANDERSEN/AFP/Getty Image

It’s no secret that despite being the world’s largest automaker, Volkswagen has long had a problem when it comes to selling cars in America. It’s so big in fact, that when Volkswagen’s famously autocratic leader Ferdinand Piëch tried to pin the mess on brand chief Martin Winterkorn, it caused an uprising on the company’s board and ousted Piëch after over 50 years with the company. Now, it looks like attempted firing of Horn was one of the last decisions made by Winterkorn; as of Friday, Porsche boss Matthias Mueller is running the show. But buried in the company’s announcement for Mueller’s ascension is this item: “Michael Horn (52) remains President and CEO of Volkswagen Group of America.”

It hasn’t been easy being a Volkswagen dealer in America. While SUVs and crossovers are driving record sales around the industry, a small, relatively niche lineup has kept sales frustratingly low, even while the company has become the world’s largest automaker. Since taking the job in January 2014, Horn has moved fast to open a better line of communication between American dealers and Wolfsburg, and the results have been overwhelmingly positive. He reset dealer sales goals to realistic levels, introduced policies to reward dealers with high customer satisfaction ratings, and convinced the German brass to shorten production cycles to give the brand a more modern, competitive lineup. So far as the dealers were concerned, Horn was the solution, not part of the problem.

JONATHAN KNIGHT/AFP/Getty Images

JONATHAN KNIGHT/AFP/Getty Images

In a statement given to Automotive News Thursday, Volkswagen’s National Dealer Advisory Council issued a statement: “Recent reports that his position may be in jeopardy over this situation made it imperative that the dealer body express our unconditional support for Michael Horn,” adding “Unless there is evidence being withheld from us showing some form of direct complicity or creation of this issue we must state that if he is removed as the CEO it would be nothing short of catastrophic to our market and our relationship.”

Echoing the Council’s statement, Matt Welch, general manager of Auburn Volkswagen outside of Seattle, told Automotive News “When we heard that, the first thing that we thought was ‘no way.’ Michael Horn is the leader who can get us through this right now,” and in a shot at the company brass added “What we don’t need is a new CEO coming in riding a white horse. What we need is stability at the top who can lead us through it.”

Luckily for its embattled American dealers, Volkswagen got the message, and by Friday, Horn’s job was officially safe. As the company enters week three of this crisis, more heads are certain to roll in the coming days and weeks. But the Horn affair is proof that this should be a search for accountability, not a blind witch hunt. No one knows what Volkswagen will look like once the dust clears, but if it makes it out in one piece, at least it will have the right man for the job in America.

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