Silicon Valley

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Attack of the Digital Automakers

Mecedes-Montage
The rise of competition from Silicon Valley is posing real challenges to German automakers, the CEO of Volkswagen told employees last week.
  • Why it matters

    Why it matters

    Martin Winterkorn, chief executive of German carmaker Volkswagen, announced at a meeting of 350 PR staff last Wednesday that the automotive industry was facing major upheaval and that the group needed to prepare for change.

  • Facts

    Facts

    • Mr. Winterkorn said that digitalization and electromobility are challenging Volkswagen’s established business model and that companies like Google, Apple and Baidu are the new competition.
    • As part of a radical restructuring program scheduled for this fall, the group’s management model will be modernized, with top managers becoming “movers rather than retainers”.
    • VW only just met its target of selling more cars than Toyota in the first half of the year. It is also facing much tougher competition on the Chinese market, where it sold more than a third of all the cars it produced last year.
  • Audio

    Audio

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Martin Winterkorn, chief executive of German automotive group Volkswagen, has been in the media more than the head of any other DAX-listed company this year.

After the once powerful patriarch of the group, Ferdinand Piëch, who resigned earlier this year, warned that Mr. Winterkorn’s days were numbered, the media spent weeks this spring speculating publicly about his future.

Discussions are still ongoing about the future orientation of Volkswagen, by far the biggest company in Germany, and about the role that Mr. Winterkorn himself will play in it.

Mr. Winterkorn has withdrawn in order to talk with confidants, both old and new. He has fine-tuned a strategy intended to lead the group into a new era. Concrete details are expected to be released in October.

The group’s approximately 350 communications staff have known since last Wednesday that a great deal is set to be reviewed.

“The coming weeks and months – just like your conference today – come under a big heading. And that heading is: Change,” said Mr. Winterkorn, expressing plainly what is to come.

For the first time, PR managers across all the group’s brands have found themselves united under the motto of “change.” Experts like Paul Begala, the former election campaign manager for Bill Clinton and Barack Obama, were invited, along with Google manager Jens Redmer and Julie Meyer, the head of investment company Ariadne Capital, who is trying to find the most successful start-ups in the Internet and technology sectors.

The “Drive Forum,” a showroom and exhibition center on Berlin’s stately Unter den Linden boulevard that was opened just this May, provided the backdrop for the conference. But instead of hearing Robbie Williams, who performed at the opening earlier this year, the guests who had traveled here from all over the world received an unexpectedly stark message.

Mr. Winterkorn, a soccer fan, said that the group had been led from mid-table to the Champions League, but that the “actual, big litmus test is still ahead of us.”

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