The Volkswagen (VW) Group is undertaking key changes to its management structure as part of the implementation of its growth strategy, while at the same time the automaker has announced that it has lifted its stake in truck-maker MAN to over 75%.
IHS Global Insight Perspective | |
Significance | The Volkswagen (VW) Group is undertaking key changes to its management structure as part of the implementation of its growth strategy, while at the same time the automaker has announced that it has lifted its stake in truck-maker MAN to over 75%. |
Implications | The shake-up will see these latest changes hone their focus on the Strategy 2018 programme, with a particular emphasis on the commercial vehicle business and the Chinese market. |
Outlook | The latest shift also opens questions as to who will eventually succeed Winterkorn in his role as CEO when he eventually retires. |
The Volkswagen (VW) Group has announced a number of key changes to its management structure as part of the implementation of its Strategy 2018 growth programme. The measures were approved at an extraordinary meeting of the automakers supervisory board last Friday (1 June). In a statement released by the automaker, its chief executive officer (CEO) Martin Winterkorn said that the "fundamental reorganization is the right response to the increasing challenges" it is facing. He went on to say: "at the same time we are laying the foundations for keeping the Group and its brands on their successful course even in a difficult market environment".
Under the reorganisation, VW has decided to add a new board of management function related to focusing on the Chinese market, underlining the significance of this market to the business. Jochem Heizmann, formerly the board member responsible for Commercial Vehicles, takes on this new "China" position. This role will now be taken by Leif Östling, outgoing president and CEO of Scania (see Sweden: 5 June 2012: Scania Appoints New President and CEO) and who will be tasked with paving the way for greater synergies between VW Commercial Vehicles, Scania and MAN, as well as the growth potential. He will also be supported by managers from across these three brands.
In other changes Wolfgang Dürheimer, CEO of Bentley and President of Bugatti, moves to Audi to become the member of its board of management responsible for Technical Development. He will be replaced by Wolfgang Schreiber, currently speaker for the board of management of VW Commercial Vehicles who in turn will be replaced by Eckhard Scholz, currently member of the board of management for Technical Development at Skoda. His role will be taken on by Frank Welsch, currently head of Bodywork Development at the VW brand.
The Audi brand has also been the focus of further changes. As well as bringing in Dürheimer, Luca de Meo, currently head of Marketing at the VW Group and the VW brand, becomes member of the board of management for Sales and Marketing at the premium brand. Bernd Martens, currently head of New Product Start-ups in VW Group Purchasing, takes over as member of the board of management with responsibility for Purchasing at Audi.
Elsewhere, member of the executive committee of the VW Group, Georg Pachta-Reyhofen, CEO of MAN SE, takes on additional responsibility for the group-wide co-ordination of the industrial engines business and for MAN Power Engineering. Anders Nielsen, previously head of Production and Logistics on the Scania Executive Board, will become CEO of MAN Truck & Bus.
VW Group Further Increases Stake in MAN
VW has announced that it has increased its influence at MAN further by increasing its voting stake from 73.76% to 75.03%. According to a statement released by the automaker, this comes into effect today (6 June). Winterkorn said: "This marks a further important milestone for achieving our joint goals in the commercial vehicles business as elsewhere through close cooperation".
Outlook and Implications
The shake-up of personnel has focused on bringing in staff with recent good track records. The strength of VW's executive appointments over the past few years, combined with those it already has in place, has meant that it has not needed to look externally to improve its management structure further. The decision to install a China-focused executive in the supervisory board underlines the importance of this region to VW's future success, having already contributed around 2.3 million vehicle sales and EUR2.6 billion (USD3.2 billion) operating profit. Heizmann's previous experience in leading plant investments in India and the US has no doubt been key to deciding this appointment where the automaker is planning to invest EUR14 billion during the next four years. Similarly, while Östling had initially rejected plans to combine the three truck-makers, there can be no denying that his years in charge of Scania will allow him to orchestrate savings across the three units, possibly as much as EUR200 million per year. Certainly this process will now be made even easier thanks to the VW Group once again raising its stake in MAN SE and securing its hold over this business.
While all these executives will move into their new roles from 1 September, others have lost out as a result. These include Peter Schwarzenbauer who has been head of Sales and Marketing at Audi since 2008 but will be replaced by De Meo and leave the company, while Dürheimer will replace Michael Dick who will retire. Elsewhere, Karl-Thomas Neumann, the head of VW's Chinese operations appears to find himself in limbo after turning down the role of member of the board of management for Technical Development at Skoda according to reports, and it appears that he will now report to Heizmann. Neumann had once been considered as a potential successor to Winterkorn and it now opens up the question of who will succeed him as CEO of VW Group. However, given the strength and depth of the current talent at VW, the difficulty it may have is not who to replace him with but who will miss out.