Volkswagen supervisory board condemns CEO’s ‘EBIT macht frei’ remark

Volkswagen supervisory board condemns CEO’s ‘EBIT macht frei’ remark

FRANKFURT (Reuters) – Volkswagen’s supervisory board on Friday condemned remarks made by the company’s chief executive after he appeared to allude to a Nazi-era slogan when he attempted to describe the carmaker’s earnings potential.

FILE PHOTO: Herbert Diess, CEO of German carmaker Volkswagen is surrounded by media during the annual news conference at the Volkswagen plant in Wolfsburg, Germany March 12, 2019. REUTERS

Herbert Diess this week said “EBIT macht Frei” before apologizing for the comments and explaining he in no way wanted to draw a comparison to the Nazi-era slogan “Arbeit Macht Frei”, which appeared on the gates of Auschwitz during the Holocaust.

EBIT refers to a company’s earnings before interest and taxes.

“Experience at Volkswagen shows that brands with higher margins normally have greater freedom of choice within the Group. My statement referred to this fact,” Diess, who made the remark at an internal meeting for employees, has said.

“At no time was it my intention for this statement to be placed in a false context.”

Volkswagen’s supervisory board on Friday said the group’s history and the responsibility is therefore bears was a major part of its corporate identity.

“The statement of the CEO Herbert Diess is in this context considered inappropriate and difficult to comprehend. The Supervisory Board of Volkswagen AG strongly distances itself from this, but at the same time takes note of the immediate apology from Hr. Diess,” it said.

Analysts at Bernstein said management change at Volkswagen had become a significant risk following the supervisory board’s statement.

“For those looking for historic parallels, the last time anyone at VW used this language was in 2015, when Supervisory Board Chairman (Ferdinand) Piech said he was “at a distance from” (Martin) Winterkorn, the (then) CEO. Winterkorn was soon gone,” they wrote.

Asked whether Bernstein analyst Max Warburton was right to suggest that Diess had lost support internally as a result of the remarks, Volkswagen’s supervisory board said such an inference was inappropriate.

“This comparison is nonsense,” a spokesman for Supervisory Board Chairman Hans Dieter Poetsch said on Friday.

Reporting by Edward Taylor and Christoph Steitz; editing by David Evans

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