September 23, 2015 / 7:01 PM / 4 years ago

Details catch up with Volkswagen's micromanaging CEO

FRANKFURT (Reuters) - Volkswagen (VOWG_p.DE) Chief Executive Martin Winterkorn, ousted on Wednesday after the company admitted deliberately falsifying U.S. diesel emissions tests, is perhaps best known for his near-obsessive attention to detail.

It is not yet clear how high up the company knowledge of the cheating went, but Winterkorn’s reputation as a micromanager only lengthened the odds against him staying in the job.

In his resignation statement, he said he was shocked by recent events and “stunned that misconduct on such a scale was possible in the Volkswagen Group”.

The scandal is still deepening five days after it first broke, forcing VW to set aside 6.5 billion euros (£4.77 billion) to cover the fallout and wiping another 22 billion off its market value.

Winterkorn said he was quitting “in the interests of the company even though I am not aware of any wrongdoing on my part”.

The “on my part” may gain in significance over coming days. In a separate statement, the VW board’s steering committee said it was “expecting further personnel consequences”.

By the time the announcement came, there was little surprise. “The magnitude of this scandal did not leave any other option,” Metzler analyst Juergen Pieper said.

Since the revelation that millions of diesel models contained software designed to circumvent emissions rules, Winterkorn had faced growing calls to fall on his sword.

“VW needs a fresh start and in our view a new CEO,” Evercore ISI analyst Arndt Ellinghorst told clients early on Wednesday as board members began gathering in Wolfsburg. They should “use the current disastrous situation to revise VW’s culture”, he added.

After almost nine years at the helm of VW, Winterkorn had been due to have his contract extended at another board session on Friday.

Instead, the meeting is expected to name his successor as either Herbert Diess, the new VW brand chief, or his Porsche counterpart Matthias Mueller - the insiders’ favourite.

On 68-year-old Winterkorn’s watch, VW had doubled sales and almost tripled profit and plant capacity as it expanded into emerging markets and harnessed China’s premium car boom.

But the breakneck expansion masked a profitability gap with rivals such as Toyota (7203.T) and mushrooming costs at the core VW brand, forcing Winterkorn to announce a hastily conceived 5 billion euro savings programme in 2014.

In one example of his attention to detail, Winterkorn ordered staff to lay out chrome auto parts on a carefully illuminated table for his close inspection during a 2011 U.S. plant visit to prepare the launch of a new model.

The emissions scandal casts just such a harsh light on VW’s chronic underperformance in the world’s No.2 car market, where it has repeatedly misjudged demand and frustrated its dealers.

An engineer by training, Winterkorn’s hands-on management style has long been blamed by critics for production delays and a failure to adapt to local needs in key overseas markets.

Multiple investigations into the U.S. emissions debacle may also bring new insight into Winterkorn’s April feud with then chairman Ferdinand Piech, which ended in the VW patriarch’s departure. Piech repeatedly cited U.S. problems in his attempts to oust Winterkorn, sources said at the time.

Reporting by Kirsti Knolle and Andreas Cremer; writing by Laurence Frost; editing by Philippa Fletcher

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