What were Volkswagen's (OTC:VWAGY) worst headlines in 2015?
Clearly the worst news for VW in many years concerned its massive emissions-cheating scandal. Shortly after charges were filed by U.S. regulators in September, VW admitted to selling millions of diesel-powered vehicles fitted with software designed to give false passing readings on government emissions tests. (Learn more here.)
That wasn't the only tough story for VW in 2015. The German auto giant's earnings were slumping before the scandal broke, on rising costs and slowing sales in China. In an ordinary year, those stories would be the focus of our attention. But the real bad news for VW started to pile up in earnest after the U.S. Environmental Protection Agency (EPA) announced its allegations late on Friday, September 18.
The Fool took its first looks at the scandal the following Monday, attempting to sort out why VW might have decided to cheat and how much the scandal could cost.
The EPA's allegations were only the beginning of the story. Two days after the Fool published the article above, CEO Martin Winterkorn was forced to step down. Winterkorn had already been under some pressure from his board because of those slumping earnings, but the scandal proved to be the last straw.
Porsche chief Matthias Mueller was given the nod to succeed Winterkorn a few days later. His informal, collaborative style represents a sea change for the traditionally autocratic company, and he seems determined to transform its culture and structure for the better. (It's still early, but history may see Mueller's appointment as the best news VW had in 2015.)
Mueller wasted no time positioning VW to deal with the consequences of the scandal. The costs were (and are) still far from certain, but by the end of September, it was already clear that the decision to use the cheating software is likely to be a very expensive mistake.
Mueller quickly warned that VW's big-spending ways would be sharply curtailed until the company came to terms with the scandal's costs. About six weeks later, he followed through with a plan that cut over a billion dollars from its 2016 spending plans.
It could be months, maybe even a couple of years, before the full consequences of the scandal play out. But some effects are already becoming apparent. VW's U.S. sales took a steep dive in November, and they slipped (though to a lesser extent) in Europe and China as well.
That drop wasn't a surprise. In the U.S., VW's diesel owners are among its most loyal and valuable customers. Many are feeling betrayed, and they've made their feelings known -- in some cases, by filing lawsuits.
Mueller is hoping to head off some of those suits by setting up a settlement fund not unlike the one General Motors (NYSE:GM) CEO Mary Barra established to deal with the consequences of defective ignition switches that were linked to over 100 accident deaths.
I think Mueller hopes the fund will help VW move past the scandal more quickly. It may turn out to have been a smart move. But in the near term, there are surely more tough headlines to come.