Volkswagen is looking to become more nimble to regional market changes and trends by giving more autonomy to brands and managers as it looks to help stimulate Germany's electric vehicle market.
IHS Automotive perspective | |
Significance | The CEO of Volkswagen (VW), Martin Winterkorn, has told company staff that the firm must become faster, more flexible, and more agile, while the firm will also look to accelerate the sales of electric vehicles (Evs) in Germany by building 12,000 charging points in car parks. |
Implications | Winterkorn and his management team are looking at a new management and corporate structure for VW which will give individual brand and regional chiefs more autonomy and responsibility. |
Outlook | The planned re-organisation has been reported to be along the lines of brand holding groups which will group similar brands together as well as giving more autonomy to regional sales units. This appears logical and is probably necessary given VW's huge expansion in recent years while the EV charging is another step toward accelerating the commercial roll-out of EVs in Germany. |
The Volkswagen (VW) Group's CEO, Martin Winterkorn, has addressed company staff about the need for the company to be more responsive in the face of an increasingly dynamic and changing global market place. The address is further confirmation of VW's plan to implement a major corporate and management structure reorganisation in the wake of Winterkorn winning his successful battle with former supervisory board chairman Ferdinand Piëch in April, which saw Piëch's departure and confirmed Winterkorn's position, by far the most powerful figure at Europe's largest car maker. However, with Winterkorn's power now unchallenged, he desperately needs to address some of the issues for which he was reportedly criticised by Piëch, namely the poor performance of the VW passenger car brand, its lack of profitability in the United States, and its unsatisfactory operating margin, which fell from 2.9% in 2013 to 2.4% 2014. At a meeting where he addressed around 10,000 members of staff at VW's corporate headquarters in Wolfsburg, Winterkorn said, "Volkswagen must become faster, more flexible and more agile. Volkswagen must make its decision-making model fit for the future." This will involve devolving more power and responsibility to individual brands and regional business heads in order to make the business more responsive to local market changes and trends. The company will finalise the plan over the summer months and will reportedly look to the supervisory board for its approval in September, when a new permanent supervisory board chairman will have been appointed.
Meanwhile, VW will look to help stimulate the relatively moribund electric vehicle (EV) market in Germany by installing 12,000 electric charging points in car parks and other public infrastructure in the country. The move comes after German chancellor Angela Merkel said her government would once more examine the possibility of introducing a direct financial incentive to act as a catalyst for EV sales, an idea that it has been discussing on and off for five years after setting the target of having one million EVs on the roads of Germany by 2020. In 2014, only19,000 EVs were sold in Germany despite it being one of the richest and most technocratic countries in the world with a sizeable green lobby.
Outlook and implications
It was reported by Handelsblatt earlier this week that VW would be split into four holding-companies, according company sources. These holding companies would be grouped along the lines of complementary brands in terms of volume and market position. The report claimed that BMW's former head of research and development (R&D), Herbert Diess, will head up a holding company that will include the VW, Skoda, and SEAT passenger car brands. There will be a separate holding company for Audi, Lamborghini, and Ducati brands which will be run by Audi CEO Rupert Stadler. Porsche, Bentley, and Bugatti will be grouped together into a single unit under Porsche CEO Matthias Müller, and VW Commercial Vehicles and the Scania and MAN heavy truck brands have already been amalgamated into the new Truck & Bus GmbH unit, which will be run by Andreas Renschler. In addition, the firm is still weighing up whether it still needs separate executives for sales, production, and the Chinese market, sources said earlier this week.
Meanwhile, VW's commitment to introducing 12,000 new charging points in Germany is one element which may help the powertrain technology become a more popular choice in Europe's biggest passenger car market. The market and the take-up of EVs from German original equipment manufacturers (OEMs) has the potential to play a significant role in seeing increased EV sales across Europe while the German OEMs would obviously prefer a strong domestic market in order to act as a catalyst for EV development that will eventually have a strong influence on how the market develops globally. There were nearly 5,000 charging stations across Germany by the end of last year, according to the Transport Ministry. IHS Hybrid-EV projects Germany to have 78,960 units and 140,634 units of charging stations in 2015 and 2016, respectively, on a cumulative basis.