Volkswagen Forges New Auto Union Through Reorganization

by Cameron Aubernon

Published: June 15th, 2015

volkswagen forges new auto union through reorganization

Volkswagen Group is reorganizing itself into a decentralized organization with four holding companies to better handle high production costs.

German business daily Handelsblatt reports former BMW manager Herbert Diess will head up the first group, expected to be composed of Volkswagen, Skoda and Seat, Automotive News Europe says. Current Audi CEO Rupert Stadler will lead the second group, featuring Audi, Lamborghini and Ducati, while Porsche CEO Matthias Mueller will be in charge of the third group made up of Porsche, Bentley and Bugatti. Finally, former Daimler truck boss Andreas Renschler will helm the last group of three, set to include VW Commercial, Scania and MAN.

The new structure is expected to improve efficiency and speed-up decision making, each group deciding what models to sell and where to sell them. The group bosses will also have a seat on the main group’s management board, while groupwide positions would be eliminated.

According to investment group Evercore ISI, the move affects mainly the mass-market trio of VW, Skoda and Seat, resulting in a unit delivering 7.6 million units annually with a combined revenue of €119.2 billion ($133.9 billion USD) and €3.2 billion ($3.6 billion) in earnings.

The reorganization also casts aside the plan made by ousted VW Group chairman Ferdinand Piech, which allowed the brands to go their own way while competing amongst each other. Industry observers say this scheme made the overall structure hard to manage, hindering quick reactions to changes in the market.

[Photo credit: Audi]

Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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11 comments

28-Cars-Later on Jun 15, 2015

So, mainstream, exotic, more exotic, and commercial. Lambo, Ducati, and Bugatti would have made more sense together with Porsche/Audi/Bentley being the second group.

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- Mike978 on Jun 15, 2015
  
  I can see why you grouped them together like that. But the Lambo/Ducati/Bugatti group would have such small volumes compared to the others. Also putting Audi and Porsche together would be a political headache since they are already competing a lot internally.
  
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- 28-Cars-Later on Jun 15, 2015
  
  @mike978 "But the Lambo/Ducati/Bugatti group would have such small volumes compared to the others." That's the idea, a low volume exotic group. Good point on Audi and Porsche. This of course begs the question should Porsche compete in boring volume spaces or should it just be, um, Porsche?
  
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- Kyree on Jun 15, 2015
  
  @mike978 Not to mention that Lamborghini, currently a subsidiary of Audi, uses tons of Audi-specific components. And likewise, Ducati is a subsidiary of Lamborghini.
  
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- Bd2 on Jun 15, 2015
  
  @Kyree But doesn't Bentley as well? Seems to me that Audi/Bentley and Porsche/Lambo/Bugatti/Ducati would have made more sense (if not Audi/Bentley/Porsche - but there's no way that Audi and Porsche would have been stuck together due to the deep entrenched enmity). But I guess this way, you keep those who compete with each other on the margins apart - top end Audis with Bentley and Lambo slotting btwn Porsche and Bugatti (keeps them on their toes).
  
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- Derekson on Jun 16, 2015
  
  @bd2 The foundation for this division of the luxury brands has been in place for about half a decade, since Porsche convinced Piech that they needed their own MSB platform for cars like the Panamera instead of being forced to use Audi's MLB platform. Part of the business plan for adding another platform was putting the next iterations of Bentleys on the new Porsche-designed MSB platform. This is largely just making a more nimble hierarchy that maintains collaborations already in place. As others have said, Lamborghini is already basically a subsidiary of Audi; they share platforms and engines and electronics with Audi's R8 and such. I think Bugatti moving from under VW's control to Porsche's is really the biggest change involved here. I wonder if the mainstream brand holding company being more independent means we might get either Skoda or SEAT in the US/Canada?
  
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- Corey Lewis on Jun 16, 2015
  
  @Kyree Yeah, Lambo these days is just supersport Audi+
  
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Pig_Iron on Jun 15, 2015

Preparing for jettison?

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1998redwagon on Jun 15, 2015

it certainly does seem to make it easier to dismantle if a reason arises.

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- 28-Cars-Later on Jun 15, 2015
  
  Perhaps the Piëch thing was an internal coup as part of a later merger/dismantling effort?
  
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FractureCritical on Jun 15, 2015

Interesting that Audi and Porsche are in different groups. Pretty much everything that Porsche makes (that isn't a 911 or a 918) has a direct competitor at Audi. were the internal squabbles too heated? or did they just want to pair the highest profit unit (Porsche) with the lowest profit/production units (Bugatti Bentley). I'd guess why Lambo isn't in that, mix, too, but they're already so cross-bastardized with Audi anyway...

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