FRANKFURT, Germany —
Volkswagen's CEO says he apologized in person to U.S.
President Barack Obama for the carmaker's emissions
scandal, in which it rigged its cars to cheat on diesel
engine pollution tests.
CEO Matthias Mueller said
he held a "two minute" conversation with the
president during his visit to Hannover, Germany, this
"I took the
opportunity to apologize to him personally for this
matter," Mueller said during the company's annual
news conference Thursday in Wolfsburg, Germany.
"I also expressed my
thanks for the constructive cooperation with his
authorities and naturally expressed the hope that I can
continue to fulfill my responsibilities for 600,000
workers, their families, the suppliers, the dealers,"
The U.S. Environmental
Protection Agency could levy fines of up to $18 billion,
but analysts think the punishment will not be that
drastic. Volkswagen seemed to endorse that view by saying
it had set aside 7.0 billion euros globally for legal
costs from 2015, on top of 7.8 billion euros ($8.8
billion) to cover fixes and an offer to buy back some
500,000 defective cars.
Overall, the company
deducted 16.2 billion euros from last year's earnings to
cover the costs of the scandal, in which it fitted cars
with software that enabled them to pass tests but then
turned emissions controls off during every day driving.
The scandal broke when the
EPA took action against Volkswagen. Some 11 million cars
worldwide have turned out to have the software.
Mueller said Thursday that
recalling and fixing the cars that were rigged to cheat on
the tests "will remain our most important task until
the very last vehicle has been put in order."
Analysts say the impact of
lower sales could make the final bill much higher than the
company's figure. Volkswagen says it is reporting costs
that it knows about at the present time.
The company said last week
that it lost 1.5 billion euros on an after-tax basis after
a profit of 11.1 billion euros in 2014.
Volkswagen is currently
working out a settlement with U.S. authorities in federal
court in San Francisco, and has said that would include an
offer to buy back as many as 500,000 of the just under
600,000 defective vehicles.
Mueller used the company's
annual news conference to also sketch out a plan to focus
more on electric vehicles and services like car-sharing as
it seeks to get past its emissions scandal.
He stressed that
Volkswagen's car business remains "fundamentally
sound" but detailed a promised plan to emphasize
digital services and zero-emissions vehicles. The company
would soon form a legally independent company to promote
business in mobility services, which can include things
like ride-sharing apps and car-sharing, he said.
Mueller said that the
company would "make electric cars one of Volkswagen's
new hallmarks" with 20 new models by 2020.
Volkswagen had previously
emphasized diesel technology, which has suffered a blow
since it became clear Volkswagen engines could not meet
U.S. emissions standards without cheating. The company has
admitted using engine software that disabled emissions
controls when vehicles were not being tested. That
improved performance and mileage but meant the vehicles
spewed far more than the legal limit of pollutants.
The annual report showed
that Volkswagen would pay 12 current and former managers
63 million euros ($72 million) in base pay and bonuses for
Of that, 4.2 million euros
in bonuses was withheld by decision of the board of
directors — but could be paid later if the company's
shares rise 25 percent in three years.
Mueller was paid 1.1
million euros for last year in fixed compensation, with
additional performance-related pay of 3.65 million euros.
Of that bonus, 880,522 euros was held back for three
Former CEO Martin
Winterkorn, who resigned after the scandal became known,
would be paid a total of 7.3 million euros for his work
until he left the job in September. That includes 1.4
million euros in base pay and 5.9 million euros in
The company said bonuses
for individual top managers were 40 percent lower than
they otherwise would have been because the company made a
loss last year, even before the decision to withhold
another 30 percent. Bonuses at Volkswagen are calculated
based on the company's performance over several years.