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VW CEO ‘personally’ apologized to Obama in plea for mercy

Matthias Mueller, CEO of Volkswagen, gave interviews during the company’s annual press conference on Thursday in Wolfsburg, Germany.
Matthias Mueller, CEO of Volkswagen, gave interviews during the company’s annual press conference on Thursday in Wolfsburg, Germany.RONNY HARTMANN/AFP/Getty Images

WOLFSBURG, Germany — The chief executive of Volkswagen said Thursday that he personally apologized to President Obama this week for cheating on vehicle emissions tests, while making what amounted to a plea for mercy as the German carmaker negotiates penalties with US officials.

Volkswagen is in talks with US authorities about the fines it must pay for programming engines to cheat on emissions tests. The company said Thursday that it had set aside 7 billion euros ($7.9 billion) for legal costs worldwide, indicating that it expected fines in the United States to be much lower than some analysts have estimated.

Matthias Mueller, chief executive of Volkswagen, had what he described as a two-minute conversation with Obama during the president’s visit this week to Hanover, not far from Volkswagen headquarters in Wolfsburg. The encounter took place on Sunday at a dinner hosted by Chancellor Angela Merkel for Obama and representatives of German industry.

“I used the opportunity to personally apologize to him for our behavior,” Mueller said during a news conference in Wolfsburg Thursday. “I thanked him for the constructive cooperation with his officials. Of course I also expressed the hope that I will be able to continue to fulfill my responsibility to 600,000 employees and their families as well as suppliers and dealers.”

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Mueller’s mention of Volkswagen workers and their families can be seen as a plea for US officials to not punish those who had nothing to do with any wrongdoing. Lawyers in the case expect the Environmental Protection Agency and the Justice Department to demand penalties that are painful for Volkswagen, but not so severe that they destroy the company.

Thousands of jobs in the United States depend on Volkswagen. The company has a factory in Chattanooga, Tenn., that is preparing to produce a new version of the Tiguan compact SUV, as well as an extensive dealer network in the country.

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Mueller said Obama appeared receptive to his remarks. The Volkswagen chief said he felt encouraged about a solution that would ensure the company a future in the United States.

The German carmaker said last week it had set aside 16.2 billion euros ($18.4 billion) to cover costs related to its admission that it had programmed diesel vehicles to evade clean air regulations. On Thursday, it said that within that figure was 7 billion euros for legal costs, which includes proceedings in other countries, such as France or South Korea.

Most of the rest of the money will be used to repair diesel vehicles that are polluting more than allowed, or to buy back ones that cannot be fixed.

In theory, Volkswagen faces fines of $18 billion in the United States alone, plus compensation to owners. But the 7 billion euro figure disclosed Thursday indicates that the company is confident the final amount will be much lower.

Volkswagen has admitted to manipulating software in 11 million cars worldwide, including about 600,000 in the United States, so that emissions equipment operated at full capacity only when the vehicles were being tested. At other times, the cars polluted much more than allowed.

On Thursday, Volkswagen also provided details on the loss it reported last week. The company said it had lost 1.5 billion euros ($1.7 billion) worldwide during the year, compared with a profit of 11 billion euros ($12.5 billion) in 2014. Volkswagen AG, a subset of Volkswagen Group that includes core operations such as the Volkswagen brand but excludes the Audi unit as well as some foreign holdings, reported a loss of 5.5 billion euros ($6.3 billion).

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Volkswagen, which owns brands including Porsche and Skoda as well as manufacturers of trucks and commercial vehicles, sold 10 million vehicles in 2015, down from 10.2 million in 2014. Revenue rose 5.4 percent to 213 billion euros ($242 billion).

Company executives said they still see the United States as a growth market for Volkswagen, despite the enormous damage to the carmaker’s image.

“We do see a lot of potential, though of course not in the short term,” Herbert Diess, the executive in charge of Volkswagen brand cars, said during the news conference. “We are starting from zero.”