Volkswagen President and CEO steps down during persisting scandal

Michael Horn, the president and CEO of Volkswagen Group of America, stepped down from his position on March 9, as the company is trying to recover from the emission scandal revealed last September.

According to Volkswagen Group of America, Horn joined Volkswagen in 1990, but he did not assume the positions of president and CEO until January 2014. He was born in Hamburg, Germany, and received his MBA from the University of San Francisco.

Horn held these positions when the emissions scandal was revealed. According to The New York Times, he played a key role in rebuilding Volkswagen’s relationship with American dealers. This comes during a time when the dealers felt unsupported by the executives in Germany and during the aftermath of the emission scandal.

Following Horn’s departure, dealers are worried that their relationship with Volkswagen will deteriorate once more.

The Environmental Protection Agency investigated Volkswagen after a West Virginia University study revealed that the company’s light-duty vehicles violated the Clean Air Act, which protects citizens from harmful pollution.

Each light-duty model entering U.S. markets must pass testing for safe emission levels. According to documents released by the EPA, Volkswagen was able to cheat these tests with the use of software, which activated itself once the car was being tested, promptly regulating the car’s emissions to required levels.

As it later turned out, emission levels were 10-to-40 times higher than the levels permitted by the EPA. The scandal resulted in many resignations, including that of the then-CEO of Volkswagen, Martin Winterkorn. A former CEO of Porsche, Matthias Muller, replaced him. A federal judge ruled that the company has until March 24 to get approval on a plan to fix the faulty diesel cars.

This deadline is not the only thing that the company has to fear; Volkswagen still faces a criminal investigation and a fine that is yet to be announced. There are also signs that Horn’s departure represents a bigger problem within Volkswagen.

Forbes claimed that the company delayed publication of its annual report until April 28, which may suggest that the impact of the emission scandal is much more significant than the company expected.

According to Yahoo Finance, Volkswagen closed at 167.40 on Sep. 17. Five days later—after the scandal was revealed—the stock closed at 111.20. The stock value did not recover to this day, as the March 11 closing price stood at 130.45.

With the combination of these figures and the delayed annual report, it is possible that Volkswagen fears to reveal the physical proof of underperformance. It is unclear where Horn will head following his departure. The press release that announced his departure did not give away any details, stating, “Through mutual agreement with Volkswagen AG, Horn will be leaving to pursue other opportunities effective immediately.”

But an article released by the AP on March 10 reveals that Horn might have been fired because of clashes with executives in Germany. He also refused to be moved out of his position and transferred to a different country when the executives from the company’s headquarters suggested the plan.

A week before Horn’s leave was announced, Ronald Stach replaced Mark Barnes as the vice president of sales at Volkswagen. A few days later. on March 11, Volkswagen’s North American Engineering and Planning Center announced that Burkhard Huhnke was hired as the vice president of product innovations. He previously served as head of product engineering at a Volkswagen plant.

The sales figures for February 2016 show a somewhat grim situation. Of the 17 models included in the report, only three experienced a positive year-to-date growth rate. One of the cars appears on the list twice—the Jetta SportWagen was renamed as Golf SportWagen and the report lists sales figures before and after the name change. Another chart released by Volkswagen breaks down sales by major markets.

When compared to February 2015 figures, February 2016 saw a 1.2 percent decrease in car sales. A decrease in sales in Brazil and Russia, the countries experienced a drop of 35.8 percent and 17 percent, respectively, was largely blamed for economic and political tensions in both countries.

For the first two months of 2016, Volkswagen saw a 1.4 percent increase in global sales when compared to the figures for the first two months of 2015. In the United States, February 2016 figures showed a 7.2 percent decrease in sales, with the numbers for the first two months showing a 7.1 percent decline.

Horn was a major figure in rebuilding Volkswagen’s relationship with its dealers and the company’s reputation as a whole following the emission scandal. With him being gone from his position, it is hard to predict how the company will fare in the near future.