Carsten Koall, Getty Images
The Wolfsburg Germany town square

VW ROUNDUP: Wolfsburg Seeks Break from Scandal Amid Christmas Cheer

Dec. 18, 2015
Volkswagen hires high-powered attorney who handled cases for 9/11 victims, the Gulf oil spill, and GM ignition switches. ... Former CEO Winterkorn still cashing in big bucks.

WOLFSBURG, Germany — Christmas carols ring out in the northern German town of Wolfsburg, while production lines at the sprawling Volkswagen plant nearby remain silent for a three-week break. 

The hometown of the German auto giant is hoping the season’s festivities will provide some respite from the global scandal that broke three months ago when VW was exposed for having installed pollution-cheating software in its diesel engines. 

Like towns throughout Germany, Wolfsburg — which owes its very existence to the iconic carmaker — has an annual Christmas market packed with wooden cabins selling doughnuts, hot dogs and mulled wine to throngs of visitors. The market is in Porschestrasse or Porsche Street, named after the car company’s founder. 

“Visitor numbers are up this year. More people are coming to the Christmas market,” said Joachim Schingale of a Wolfsburg marketing group which is in charge of attracting tourists to the town situated about 125 miles west of Berlin. 

One vendor, Johnny Traber, grills salmon on firewood at a stand he has run for the past four years. “For the moment, there’s no difference to last year,” said the 40-year-old from Duesseldorf.

Wishful Thinking: ‘Crisis Already Over’

For this time of year, the weather is unseasonably mild and sunny. And perhaps it adds a little to the positive feeling that’s tangible in the town of 124,000 residents.

The massive scandal — triggered, as has been written so many times here and elsewhere, when VW was forced to admit in September that it had installed so-called defeat devices in 11 million diesel engines worldwide — does not seem to have permanently dented morale in Wolfsburg.

“The crisis is already over,” said 76-year-old Peter Philipp.

When the scandal broke, his friend Lothar Schroeder, who worked for VW for a quarter of a century, was “shocked” and “disappointed” like everyone else, he said. People were scared they would lose their jobs. 

“But that hasn’t been the case. There haven’t been any redundancies,” said his wife Heidrun, 72. 

At the City-Galerie shopping mall, manager Janine Marz noted that “of course, at the beginning, there was uncertainty about possible fallout from the scandal, but at the moment, I don’t see any repercussions.”

Under the Christmas baubles and lights, the mall is packed with shoppers. 

“We’re very happy. The shop owners say business is comparable to last year,” she said. 

Town Budget Worries

Wolfsburg is a young town, only springing up after the Volkswagen factory was built back in 1938.

“For the past 70 years, people have been living here alongside a gigantic manufacturing plant,” said Schingale, whose tourist office is 80% financed by the town authorities. “That has both its advantages and its drawbacks. But everything has always turned out OK in the end.”

Wolfsburg has, however, warned that the office’s budget, which has doubled over the past five years, will be frozen at best next year. 

The VW plant employs more than 70,000 people and the local business tax it pays makes up the lion’s share of the town’s finances. So Wolfsburg is worried that the vast financial costs facing the carmaker will also hit its own coffers. 

The town’s mayor announced an immediate freeze on spending and hiring in late September, and the 2016 draft budget presented this week estimates a drop of around one-third in tax revenues and a 40% cut in investment.

“We don’t really know where we’re headed,” Wolfsburg’s finance chief Thomas Muth recently said. 

Volkswagen said that it expects worldwide sales of its own VW brand to fall this year for the first time in a decade. Employees will have to forego a 2016 bonus.

Still, VW loyalty remains. Lothar and Heidrun Schroeder, who live in the nearby town of Helmstedt, plan to come back to Wolfsburg in January to collect their new car. The model?  A Volkswagen, “of course.” 

by Marie Julien

VW Hires Star US Lawyer to Handle Diesel Cases

Volkswagen announced on Thursday that it has hired lawyer Kenneth Feinberg to handle the complaints.

Feinberg is known for handling large consumer compensation cases such as the deadly ignition switches used in some General Motors cars, and was hired to design and administer an independent claims resolution program to address claims related to the diesel-engine vehicles equipped with emissions standards-spoofing software.

Feinberg said he would begin work “immediately” designing an independent claims process. He is renowned as the go-to lawyer for high-profile legal cases, also managing similar funds for the victims of the September 11, 2001, terror attacks and the massive oil spill in the Gulf of Mexico in 2010.

Former CEO Winterkorn Still Drawing Huge Salary

Former VW CEO Martin Winterkorn, who quit in the wake of the massive pollution-cheating scandal, is still on the carmaker’s books and receiving a huge salary, according to two German media reports on Friday. 

The business daily Handelsblatt and German public television’s investigative news program Frontal 21 said Winterkorn’s contract runs until the end of 2016, as agreed, and he is receiving his full salary. The two reports quoted sources close to VW’s supervisory board. Winterkorn, 68, was in the driving seat at the auto giant from 2007 until the scandal broke in September. 

He has a basic annual salary of 1.62 million euros ($1.75 million), plus a range of generous bonuses. Winterkorn was paid more than 15 million euros ($16.23 million) in 2014, making him the highest-paid executive among the 30 companies that make up the German blue-chip DAX 30 stock index. Quoting the sources close to the supervisory board, VW saw “no reason not to continue paying” him, Handelsblatt reported. That meant Winterkorn would receive more than 10 million euros ($10.82 million) for 2015, it said.

Copyright Agence France-Presse, 2015

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