VW CEO Mueller blunders by blaming emissions rigging on 'technical problem'

DETROIT (Bloomberg) -- Volkswagen Group CEO Matthias Mueller is struggling find the right tone on his first official U.S. visit, where he is under pressure to placate lawmakers and regulators to emerge from the emissions-cheating scandal.

In an interview with National Public Radio on the sidelines of the Detroit auto show, Mueller said VW "didn’t lie" to regulators when first asked about irregularities between test and real-life emissions in its diesel cars.

The issue, related to rigging engines to cheat on emissions tests, was instead caused by "a technical problem" and stemmed from a misinterpretation of U.S. law, the CEO said, appearing to downplay the company’s role in actively deceiving regulators.

Mueller then questioned the reporter's assertion that Americans believe there are ethical issues within the company: "I cannot understand why you say that."

VW asked for a second chance after the public radio network aired the comments, which were made at a VW event Sunday evening, on its "Morning Edition" program, a staple of the commute for many U.S. professionals. Mueller apologized in the follow-up interview on Monday, citing noisy surroundings in the first conversation.

"We fully accept the violation," he said. "There is no doubt about it," and the company is doing its "utmost" to resolve the issue.

Chaotic environment

VW defended Mueller, saying the comments were a misunderstanding stemming from the chaotic environment at the event.

"This was a very extreme situation in which this interview took place," spokesman Claus-Peter Tiemann said by phone. "Mueller was standing in a crowd of journalists with questions being shouted at him in different languages. One question obviously was misinterpreted, taken out of context maybe, so the interview was redone."

VW obfuscated for nearly a year before admitting to regulators that it had installed software to bypass pollution tests in its diesel cars, the EPA said in September. Its relations with the agency have been strained since then, and there’s still no confirmed solution for how to fix about 480,000 cars with 2.0-liter diesel engines in the U.S.

The company might be able to fix about 430,000 of the vehicles by adding a newly developed component to neutralize the smog-inducing nitrogen oxides in the emissions, Mueller said on Sunday. Still, the actual number could vary and depends on the EPA’s approval, he said.

"We have worked night and day to find solutions. Not only technical solutions," Mueller said in the followup interview with NPR. "It’s a lot of work for the lawyers and also for the press department."

Opera ball

The to-and-fro is indicative of Volkswagen’s response to the scandal, which is being steered largely by company veterans while customers have had to wait as the carmaker figures out what to do with the affected vehicles.

Mueller has cultivated a relaxed image in Germany, a stark departure from the stern presence of his predecessor Martin Winterkorn. In October, he encouraged Volkswagen employees to be more open and cooperative, with the goal of making the company "more fun to work for."

The public-relations gaffe was the latest in a series by Mueller, who has come under criticism for waiting nearly four months to meet U.S. regulators while at times giving the impression that the crisis wasn’t his top priority.

The 62-year-old Volkswagen veteran, who previously ran the Porsche sports car brand, was photographed with a bottle of champagne at the Leipzig Opera Ball shortly after he took over as CEO in the wake of the scandal. He then turned up a few weeks later smiling on the sidelines of a car race in Bahrain. He also cut short his appearance on Volkswagen’s third-quarter earnings call to join German Chancellor Angela Merkel on a trade trip to China.

Last year Mueller suggested to a group of journalists in Stuttgart, Germany, that he was too old to succeed then-CEO Martin Winterkorn. He later said he’d been misunderstood. Then during Porsche’s annual earnings press conference he let slip plans for an all-electric vehicle. Though he evaded follow-up questions, the unit showed the car months later at the Frankfurt auto show.

With meetings looming Wednesday in Washington D.C. with lawmakers and Environmental Protection Agency head Gina McCarthy, Mueller must now convince authorities that he’s taking them seriously and their concerns are being addressed, said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany.

“Not all has gone smoothly since he took the scepter, especially with the U.S. authorities,” Bratzel said. “It’s important to admit that there actually were untruthful answers, that there was deception.”