VW Takes New Road
November 17, 2006
After a preliminary decision last week by the executive committee, the board of Wolfsburg-based Volkswagen announced Friday that the head of the Audi brand will take charge of the whole VW group. Martin Winterkorn is set to replace Bernd Pischetsrieder on January 1, 2007.
Winterkorn intends to assume the direction of the Volkswagen brand himself, according to reports, which has led to speculation that current Volkswagen boss Wolfgang Bernhard may resign.
Bernhard has overseen and initiated many reforms at Volkswagen over the past year and a half. He did not make a resignation announcement at Thursday's board meeting, as had been expected, reported ARD online. No further information was given at Friday's meeting.
New CEO plans centralization
Supposedly, Bernhard wants to go because Winterkorn's restructuring plans would mean a loss of influence for him.
The Audi boss reportedly aims to create a centralized model and to align development and production functions in order to avoid redundancies.
Increasing productivity will also be high on his to-do list. It now takes workers 47 hours to assemble a Volkswagen Gold, while a Toyota Corolla, a Ford Focus and an Opel Astra can be built in half that amount of time -- which doesn't add up to a competitive edge.
Winterkorn's restructuring plans "glaringly contradict the rules of good management, according to which the board should supervise the managers but shouldn't run the company," wrote the Frankfurter Allgemeine Zeitung in its Friday edition.
Porsche takeover still plausible
Some suspect that the driving force behind Bernd Pischetsrieder's resignation on Nov. 7 and the management modifications is Ferdinand Piëch. As chairman of the Volkswagen board and a member of the Porsche family (he is the grandson of Ferdinand Porsche, who developed the first Volkswagen Beetle in the 1930's), he is influential from multiple angles.
As of Wednesday, Porsche now owns 27.4 percent of the Volkswagen group. Thirty percent ownership would constitute a takeover, a possibility which is becoming more and more plausible, despite the official company line to the contrary.
However, there is currently a law on the books in the state of Lower Saxony, where Volkswagen headquarters are located, which stipulates that no shareholder can gain more than 20 percent of the vote, regardless of their proportion of the shares.
The law is generally seen as a way for Lower Saxony to maintain its majority influence in the corporation. The state owns 20.8 percent of the total shares.
The European Commission has indicated that the law may stand in violation of European law and the European Court of Justice is expected to overturn it by next summer. Initial discussions on the matter are scheduled to begin on December 12.
MAN-Scania a hot topic
Volkswagen also has a more concrete takeover bid on the table right now. Munich-based truck manufacturer MAN bid on Thursday to buy up its Swedish competitor Scania for 10.2 billion euros ($13 billion).
Volkswagen has more than 34 percent ownership in Scania and, since October, 15.6 percent in MAN. It could potentially force its own Brazilian truck manufacture into the mix, or support a hostile takeover of MAN by Scania, according to reports.