Martin Winterkorn, Volkswagen’s chief executive, facing shareholders in Hanover, Germany, in May. He now faces scrutiny over VW’s admission that it faked emissions testing. Credit Alexander Koerner/Getty Images
Striding past a car show model, Martin Winterkorn, trailed by aides, examined a Hyundai i30.
He
poked the hatchback with a measuring device he had in his pocket, then
squeezed his stocky frame into the driver’s seat. He ran a finger along
the interior plastic, then fiddled with the adjustable steering wheel.
“It
doesn’t clank,” Mr. Winterkorn said to a member of his entourage, with a
note of annoyance in his voice. “BMW can’t do it. We can’t do it. They
can.”
The scene from the Frankfurt auto show in 2011, captured on a YouTube video that has gone viral, has become famous as an illustration of the Volkswagen chief executive’s attention to detail and his insistence on technical excellence.
It was a display of the determination that helped Mr. Winterkorn, 68, lead Volkswagen past Toyota in the number of cars sold this year, making it the world’s largest carmaker — at least for now.
But
now Mr. Winterkorn’s detail mania could become a liability, as he faces
mounting scrutiny over the revelation that millions of diesel models
contained software designed to evade emissions regulations.
The
widening scandal has become a threat to the empire that Mr. Winterkorn
helped build with his onetime mentor, Ferdinand Piëch. Though it still
manufactures the kind of practical cars for the masses that made
Volkswagen famous, the company today also makes Porsche and Lamborghini
sports cars, Bentley luxury cars and over-the-top Bugatti sports cars
that sell for more than $1 million.
Until
the deception became public on Friday, Mr. Winterkorn’s future with
Volkswagen had seemed more or less secure after he emerged the victor of
a bitter power struggle
this year that ended with the ouster of Mr. Piëch, the company’s
longtime chairman, who was sometimes described as Mr. Winterkorn’s
stepfather.
Mr.
Piëch, a member of the powerful Porsche family that owns a significant
stake in Volkswagen, began pressing for Mr. Winterkorn’s ouster in March
— ostensibly because he was unhappy with the company’s failure to
expand its market share in the United States.
But
Mr. Piëch’s campaign to remove Mr. Winterkorn failed to win the support
of other key Volkswagen shareholders, including a cousin, Wolfgang
Porsche, as well as the German state of Lower Saxony, which owns a 20
percent stake. In April, Mr. Piëch — a grandson of the creator of the VW
Beetle — stepped down.
With
Mr. Piëch’s influence diminished, Mr. Winterkorn pushed ahead with a
strategy of improving profit margins at Volkswagen, which continues to
struggle to make inroads in the United States and whose growth has
stalled in emerging markets like Brazil, China and Russia. The plan
includes the discontinuation of unprofitable VW models and the slashing
of 5 billion euros, or about $5.5 billion, in operating costs by the end
of 2017.
Just
two weeks ago, a steering committee of the board had voted unanimously
to extend Mr. Winterkorn’s mandate, which was due to finish in 2016,
until the end of 2018.
Volkswagen’s
traditional culture of highly centralized decision-making could make it
difficult for Mr. Winterkorn to deflect suspicions that he and other
senior managers at the company’s headquarters in Wolfsburg, Germany,
were unaware of the software manipulations at the heart of the scandal,
experts say.
“This
wasn’t a small engineering decision that slipped by management,” said
Jo-Ellen Pozner, an assistant professor at the Haas School of Business
at the University of California, Berkeley. “It seems to me like
something had to be approved by at least a division head.”
With
an annual salary of more than €16 million, Mr. Winterkorn is Germany’s
highest-paid chief executive. Since taking the helm in 2007 — before the
software began appearing in the 2009 model year diesel cars — he has
enjoyed the support of Chancellor Angela Merkel as well as the
automaker’s powerful workers’ council. But on Tuesday, it was not clear
whether Mr. Winterkorn, whom colleagues refer to by the nickname Wiko,
would be able to count on their continued support.
“If
it emerges that Winterkorn was involved in the issue, then he would
step down on his own,” Bernd Osterloh, a Volkswagen board member and
labor leader who has until now been an ally of Mr. Winterkorn, told
reporters in Frankfurt on Tuesday. “We can’t afford such reputational
damage.”
Mr.
Winterkorn has nurtured a passion for cars since his childhood in
Leonberg, in southwestern Germany, home to a Porsche test site where he
used to watch the German sports car maker’s autos whiz by on a track
near his home.
Mr.
Winterkorn, who was born in 1947, studied metallurgy and physics at the
University of Stuttgart, later earning a doctorate in metal physics.
Mr.
Winterkorn began his working life at Bosch, the German engineering and
electronics group, and in 1981 entered the automobile industry as a
quality controller at Audi, one of the Volkswagen group’s stable of 12
brands.
For
30 years, he worked successfully alongside Mr. Piëch, once describing
their relationship as a partnership where Mr. Piëch was responsible for
conceiving new ideas while Mr. Winterkorn was in charge of transforming
them into roadworthy vehicle designs.
Yet
despite decades of working together, the two men never became close
friends, always maintaining a professional distance and addressing one
another using the formal German word for you, “Sie.”
All the while, Mr. Winterkorn has determinedly raised his public profile, appearing at industry events like the annual Detroit auto show and giving bold proclamations at lavish corporate presentations.
At
the show in 2013, he captivated a large contingent of journalists at an
invitation-only event scheduled the night before press previews at the
show.
“VW
won’t cut back,” he said. “We will stay in the fast lane,” he added,
referring to the company’s growth plans in America. “VW grows with the
challenges. And we continue to do so, even when times are tough.”
One
executive within VW, who spoke on condition of anonymity, described Mr.
Winterkorn as extremely meticulous about technology and how the
company’s cars were marketed to the public.
The executive said that employees waited nervously for Mr. Winterkorn’s ceremonial tour of the company’s auto show exhibits.
Always
accompanied by teams of support personnel, he was known for closely
examining every car on display, from the type of wheels to the interior
color combinations.
“It was like the general had arrived to inspect the troops,” the executive said.
Mr.
Winterkorn, a Porsche family outsider, has managed to maintain his
position by carefully navigating the often-complex machinations of
various factions that have jousted for control of the group.
In
2005, Porsche set out on a cunning plan to conquer the much larger
Volkswagen. But that plan required borrowing billions of euros — a move
that enlarged its debt load two years later, just as global capital
markets froze up when the global financial crisis hit.
Financially
weakened, Porsche was forced to accept integration into Volkswagen in
2008, further consolidating Mr. Winterkorn’s power. Volkswagen
ultimately assumed full ownership of the Porsche brand in 2012.
Now
made vulnerable by the scandal, it remains unclear whether Mr.
Winterkorn can count on the continued support of past allies, who
include Stephan Weil, the prime minister of Lower Saxony who told
reporters on Tuesday that he did not wish to “prejudge future
discussions” about Mr. Winterkorn’s future at Volkswagen or discuss any
“possible consequences.”
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