Company investigation focuses on two men elevated after Winterkorn was made CEO
Ulrich Hackenberg and Wolfgang Hatz, among the engineers suspended in the investigation of the VW emissions cheating scandal, are viewed as two of the best and brightest engineers in German industry. Above, a VW factory in Chengdu, China. P`
WOLFSBURG, Germany—Two top Volkswagen engineers who found they couldn’t deliver as promised a clean diesel engine for the U.S. market are at the center of a company probe into the installation of engine software designed to fool regulators, according to people familiar with the matter.
The two men, Ulrich Hackenberg, Audi ’s chief engineer, and Wolfgang Hatz,developer of Porsche’s winning Le Mans racing engines, were among the engineers suspended in the investigation of the emissions cheating scandal that sank the company’s market value by 43% since Sept. 18 and triggered a world-wide recall to refit the engines to meet clear-air standards, these people said.
Messrs. Hackenberg and Hatz, who didn’t respond to requests for comment, are viewed as two of the best and brightest engineers in German industry. They were put in charge of research and development at the Volkswagen group shortly after Martin Winterkorn became chief executive in January 2007. Mr. Winterkorn, who resigned over the scandal, couldn’t be reached for comment.
The company has acknowledged that managers, struggling to meet U.S. sales targets, masked the emissions of new-car engines to sell so-called clean diesel technology to skeptical American consumers. The car maker said as many as 11 million vehicles carried a “defeat device,” software that reduces tailpipe emissions only when the car is being tested, not on the road.
Several countries have since blocked sales of certain VW vehicles, and regulators are considering steps to tighten emissions standards for diesel engines.
The details haven’t been made public, but Volkswagen’s investigation is focused on Messrs. Hackenberg and Hatz, Mr. Winterkorn’s top aides during his tenure at Audi, as well as Heinz-Jakob Neusser, head of development at the VW brand, people familiar with the matter said.
Mr. Neusser, also suspended, joined VW from Porsche in 2011, long after the diesel engines began production. He declined to comment.
Disclosure of the scam by the U.S. Environmental Protection Agency last month unleashed criminal investigations of Volkswagen and its management in the U.S. and Europe, and threatened to bury the company in shareholder and customer lawsuits for years.
“Our company was dishonest with the EPA, and the California Air Resources Board, and with all of you,” Michael Horn, head of Volkswagen of America, told dealers last month in New York City. “We’ve totally screwed up.”
For years, Volkswagen sought a triumph in the U.S. As part of an expansion of the company to sell at least 10 million cars a year by 2018, Mr. Winterkorn’s strategy was to be a leader in the world’s three biggest markets.
The History of Volkswagen, ‘The People’s Car’
Volkswagen has always been more than a car. It occupies a special place in German society. WSJ’s Dipti Kapadia goes through some of the iconic moments for the German auto maker, now caught in a scandal over emissions. Photo: Getty Images
Under Mr. Winterkorn, Volkswagen became the biggest foreign car maker in China. In Europe, one in every four cars is now sold by one of Volkswagen’s eight car brands: VW; premium car maker Audi; sports car brand Porsche; Czech car maker Skoda; Spanish auto maker SEAT; and ultraluxury brands Bentley and Lamborghini.
VW hit its 10 million global target in 2014—four years earlier than planned—and passed Toyota Motor Co. and General Motors Co. to take the top spot in the first half of this year. But to dominate the global market it needed to increase U.S. sales.
Mr. Winterkorn gave U.S. executives a goal of more than tripling annual sales, to at least 800,000 vehicles, in a 10-year plan he set in 2008.
Wolfgang Hatz, above, and Ulrich Hackenberg were put in charge of research and development at the Volkswagen group shortly after Martin Winterkorn became CEO in 2007. Photo: Patrick T. Fallon/Bloomberg News
While popular in Germany, diesel-engine vehicles made up just 5% of the U.S. car market in 2007, when Mr. Winterkorn left Audi to be VW’s CEO. Seeing this as an advantage, diesel became the centerpiece of the U.S. campaign.
Volkswagen pitched U.S. buyers a powerful car with German engineering that met standards on tailpipe emissions by burning high-performance “clean diesel” fuel.
At Volkswagen headquarters in December, Mr. Winterkorn stood in a top-secret showroom known informally as Valhalla and leaned across the hood of a prototype sport-utility vehicle, the CrossBlue, to be built in Chattanooga, Tenn. One version was to have included the clean-diesel engine technology.
“The Yanks like things big,” he quipped to The Wall Street Journal about the vehicle.
The company’s clean-diesel strategy began a decade ago, when the Volkswagen brand was run by Wolfgang Bernhard, who was poached from rival Daimler AG by Bernd Pischetsrieder, Volkswagen CEO at the time. Mr. Bernhard set out to build a new diesel engine for the U.S. market, named the EA 189. Mr. Bernhard and Mr. Pischetsrieder last month issued a joint public statement “dismissing in the strongest possible terms” any connection with the emissions cheating scandal related to the EA 189.