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New boss plans VW revolution

By Georg Kacher

Motor Industry

22 November 2006 10:00

The Volkswagen Group is set for a huge shake-up, following the resignation of chairman Bernd Pischetsrieder.

Product plans across all seven marques, the group brand strategy, platform sharing and costs will all be reviewed by incoming boss Martin Winterkorn, who clinched the role following Audi's stellar performance under his leadership. CAR Online can reveal that Winterkorn is likely to rip up Pischetsrieder's brand group structure, to improve communication and efficiencies.

Under Pischetsrieder, who resigned on 7 November, the two brand groups were: Volkswagen, Skoda, Bentley and Bugatti, run by Wolfgang Bernhard Seat, Audi and Lamborghini, managed by Winterkorn Sources claim that Winterkorn will introduce a more logical structure, bundling the premium marques - Audi, Bentley, Lambo and Bugatti - together, and grouping the volume brands. But because Audi and VW's product plans are so closely interwoven, I'm not convinced that this is the best option. The Audi A3 and Golf have always been blood brothers, but a heap of new metal cements those ties: Audi's forthcoming baby A1 hatch is twinned with the next Polo; VW's Phaeton limo replacement should be spun off Audi's new big car platform (codenamed MLB), which underpins cars like the new A5; and VW's 2009 Sportvan will be based on the current A6 Avant.

Instead of splitting the brands, Winterkorn should consider installing three powerful top managers: a group engineering director; a group sales and marketing specialist; and a group production guy. These overseers would ensure a far more co-ordinated car portfolio, produced with maximum efficiency. To boost profitability and stop VW losing millions in North America, the group must exploit its huge scale. It has three major platforms: Polo-sized (PQ24/25) worth 1m units per year; Golf-sized (PQ34/35) covering 2m; and Audi's forthcoming MLB chassis, which will account for 1m units from the A4/A5/A6/A8/Q5. VW needs to ensure it gets a better payback from these competitive component sets, thanks to streamlined structures and more efficient processes, the total integration of purchasing and engineering, new cost- and quality-driven technologies and a much better cross-adaptivity of core modules from electronic platforms to drivetrains. The modular approach allows R&D to dial content in or out according to individual market requirements and specific investment targets, so the controversial world car approach does make sense again as long as one of its prime principles is maximum content and cost differentiation.

But the changes don't have to end there. Winterkorn could even rationalise facilities. Why does every brand have an own independent R&D centre? Why is procurement within the group so poorly coordinated? And why is there an occasionally dramatic imbalance between undercapacity and overcapacity? Excessive proliferation ruins profitability. Just look at the huge variety of engine variations, even in the same displacement and output bracket, and the multitude of transmissions. Conversely - and despite seven brands - the group still has yawning gaps in the product portfolio. The empire currently lacks: a small sports car; a compact crossover/SUV, although the Tiguan is on the way; a modern rear-wheel drive matrix; a production-ready hybrid (or alternative propulsion) model; a truly global entry-level vehicle.

To get the house in order, the new leaders will have to reconsider and regroup their offerings; sharpen and sometimes redefine individual brand values; reduce cannibalisation through better forward planning; and spread unique pace-setting technologies across the board.