Restructuring Plan

At VW, Dividing to Conquer

Ausgang Winterkorn DPA
Martin Winterkorn, the VW CEO who survived a leadership struggle with the company's controlling shareholder, is planning to restructure the group into four units to make the 12-brand behemoth fleeter of foot.
  • Why it matters

    Why it matters

    CEO Martin Winterkorn is decentralizing power at the Volkswagen Group in the aftermath of Ferdinand Piëch’s resignation from the supervisory board.

  • Facts

    Facts

    • The Volkswagen Group will divvy up its 12 brands between four holding groups, which will have representation on the management board.
    • The holding groups will have more independence to set target countries and make decisions about marketing, distribution and sales.
    • The biggest change will come in the passenger brands. Volkswagen Passenger Cars, Skoda and Seat willbe consolidated into one holding under the leadership of Herbert Diess.
  • Audio

    Audio

  • Pdf

Wolfsburg, the headquarters of Europe’s largest automaker Volkswagen, has too much power. That was the simple message of the VW chief executive, Martin Winterkorn.

The 68-year-old Mr. Winterkorn met on Friday with the automaker’s policy-setting supervisory board and some close confidantes at an airport in Braunschweig before flying to Le Mans, France, for the world’s oldest 24-hour endurance car race.

According to information obtained by Handelsblatt, Mr. Winterkorn plans to consolidate Volkswagen’s 12 automobile brands — which include VW, Audi, Porsche, Seat, Skoda, Bugatti and Bentley, into four operating units.

The goal is to give the parts of the German automaker much greater independence to choose the countries where they focus their sales, and other aspects of their operations.

In the future, only the leaders of these groups will be members of Volkwagen’s management board, the top executive board in the automaker.

Marketing and distribution will no longer be represented on the top panel. Instead, the brands will take over these responsibilities themselves.

The VW headquarters in north central Germany will then focus primarily on strategy and management. Mr. Winterkorn, who has been deeply involved in day-to-day operations of Volkwagen’s core brand, plans to take a step back.

 

Facets of a Car Empire-01

 

By delegating more power, he hopes to secure his base of support and make the automaker more responsive to changes in global markets.

The structure will be modeled after the new commercial vehicles group, which includes VW’s Scania, MAN and Volkswagen Commercial Vehicles.

Little will change at Audi and Porsche, Volkswagen’s most profitable brands. Audi head Rupert Stadler will continue to lead Ducati and Lamborghini. Porsche chief Matthias Müller will take over Bentley Bugatti.

“Business is good at Audi and Porsche, we cannot risk their success,” a source at Volkswagen, who asked to remain anonymous, told Handelsblatt.

The real change will take place in the mass-market brands.

Volkswagen Passenger Cars, Seat and Skoda will be consolidated into a single group under Herbert Diess, a former member of the board at BMW.

Volkswagen’s core brand faces growing challenges in China, one of its most important export markets. Beijing has ramped up the production of its domestic car manufacturers, cutting into Volkswagen’s sales there.

During the first quarter of 2015, core brand sales in China had fallen slightly below the previous year for the first time. Volkswagen’s core brand sales have also slumped in North and South America.

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