Legendary auto exec says VW was under a 'reign of terror' that led to emissions scandal

Bob Lutz is taking no prisoners in his relatively new gig as a columnist at Road and Track magazine. In his last column, he said that Tesla was doomed.

Now he's taking on the Volkswagen scandal — and taking aim at one of the men at the top, if not the top, of the VW Group hierarchy.

"Ferdinand Piëch, the immensely powerful former chief of Volkswagen's supervisory board, is more than likely the root cause of the VW diesel-emissions scandal," Lutz writes.

It gets worse.

"It's what I call a reign of terror and a culture where performance was driven by fear and intimidation," Lutz continues.

And then this:

He just says, "You will sell diesels in the U.S., and you will not fail. Do it, or I'll find somebody who will." The guy was absolutely brutal.

I imagine that at some point, the VW engineering team said to Piëch, "We don't know how to pass the emissions test with the hardware we have." The reply, in that culture, most likely was, "You will pass! I demand it! Or I'll find someone who can do it!"

In these situations, your choice was immediate dismissal or find a way to pass the test and pay the consequences later. Human nature being what it is — if it's lose your job today for sure or lose your job maybe a year from now, we always pick maybe a year from now.

Lutz knows his way around a boardroom and an engine compartment. One of the last of the true "car guys" to dispense gruff bon mots for an audience of automotive journalists who adored the man, Lutz spent a career at places like Chrysler and General Motors.

But he also turned in a stint at BMW, so he knows the Germans. He was born in Switzerland and speaks German. For him, VW isn't mystical — it's a bunch of German men engaged in a power struggle.

So is he right?

REUTERS/Arnd Wiegmann

Well, Piëch was effectively deposed by former VW CEO Martin Winterkorn and the VW board before the emissions-cheating scandal broke. Not that he went away — his ties to the Porsche family, which controls a big chunk of the automaker, ensured that he would exert influence. And he has: Matthias Müller, the new VW CEO, used to run Porsche and was Piëch's pick to run VW.

We now know that Porsche hasn't been completely spared from the crisis, as the VW Group's 3.0-liter diesel engines have now been flagged by the US Environmental Protection Agency as having cheat software installed. Before, we thought it was only the 2.0-liter diesels that were at the center of the controversy.

On balance, it's all rather tragic, as Lutz notes: "This diesel fiasco is immeasurable in terms of damages — so much worse than Toyota acceleration, Ford Firestone tires, or GM ignition switches. In all those cases, tragically, people died, but it wasn't premeditated."

Also, it's pathetic. VW keeps getting busted in the US for diesel-emissions cheating, but the US is a market where buyers don't really give a hoot about diesels. VW is already selling a meager number of vehicles in the US compared to its competition, which translates into a dismal 2% market share — GM has 18%.

Now Porsche, glorious Porsche, the jewel in the crown, may get sucked in because they dropped a diesel into the Cayenne SUV. Just check that: Porsche will get sucked in ... for diesels in an SUV — a Porsche SUV! Yes, plenty of people have bought Cayennes, but who buys a diesel Porsche? Seriously: Who? In the US, anyway.

Here's the thing about Lutz: He's been around the car business long enough to know that whole global companies can become about one man. Lutz worked for Lee Iacocca at Chrysler, one of the most mercurial leaders ever in American business. He also worked for Rick Wagoner at GM — before GM was bailed out and went into bankruptcy during the financial crisis, and Wagoner was effectively fired as CEO by US President Barack Obama.

Lutz thinks it was all Piëch's fault. Maybe absolute power does corrupt absolutely.