Audi CEO behind bars due to dieselgate emission scandal

Luxury carmaker Audi’s CEO Rupert Stadler was arrested on Monday due to the ongoing diesel emission scandal, which has been plaguing the parent company Volkswagen for the past three years. Prosecutors in Munich have added that Stadler was apprehended due to looming concerns that he might tamper the evidence and hinder the progress of the ongoing scandal.

Audi’s parent company Volkswagen has confirmed Stadler’s arrest, and it’s widely reported that today’s board meeting is convened to find an alternative for Stadler. If media rumors are to be believed, Bram Schot might be appointed as the Interim CEO for Audi. Schot currently looks after the sales and marketing for the luxury carmaker.

Stadler who joined Audi in 1990, handled various capacities that included sales and marketing as well as finance before he became the Chairman of the board and CEO of Audi in 2007.  He also joined the Volkswagen’s board in 2010.

It’s worth noting that Volkswagen accepted in 2015 that it had deployed software in its cars (nearly 11 million) to rig up the emission tests. Last week German prosecutors imposed a $1.2 billion penalty to the automaker in lieu of the emission scandal. The company had spent a whopping $30 billion till now relating to the scandal, which includes costs relating to settlement, recalls and penalties.

Within days after the scandal came to the fore, Volkswagen CEO Martin Winterkorn took responsibility for the mishap and renounced his position. The board replaced Winterkorn with Matthias Muller who was heading Porsche to clean up things. It’s has been tough times for Muller since taking the helm from Winterkorn as it has lost customer confidence and facing the heat globally from regulators and critics.

In April this year, Volkswagen announced that Herbert Diess will be taking over the reins from Muller from August. Muller has been under the helm of affairs for nearly three years seem to be struggling with the transformation of the carmaker, which is already finding it hard to come out of its tainted image post the scandal.

Related: Former Volkswagen CEO indicted over emissions scandal

In addition to new CEO appointment, the Wolfsburg-based company also announced major changes in its operations. As part of the revamp, the entire group would be grouped into six business units and with China as a separate portfolio. Also, Volkswagen has classified its brands into three new groups based on the target customer segmentation (value, premium and super-premium).

For now, investors, critics and experts are gung-ho about the appointment of Diess. It’s important to note that the incumbent has his task cut out right from the day one because Volkswagen has been facing a multitude of issues right from restoring brand confidence, tackling competition, improving profitability, complying with regulations, keeping abreast with new technologies, rising costs etc. Diess has to make sure he is transforming the company in line with its “Strategy 2025” goals.

In order to tackle competition and dwindling diesel car sales amidst growing concerns globally on pollution, Volkswagen wants to beef up its hybrid and electric segment. Earlier this year, the company announced it plans to invest $48 billion in battery cell manufacturing as part of the “Roadmap E”. It also added it plans to produce 3 million electric vehicles each year by 2025.

Reacting to Stadler’s arrest, Volkswagen’s shares plunged nearly 3% in Frankfurt. This year, the carmaker has lost nearly 9%.