VW CEO Winterkorn Shakes Up Management Ranks to Push Growth

Volkswagen AG (VOW) Chief Executive Officer Martin Winterkorn appointed a new trucks chief, added a top executive for China and replaced three Audi board members as part of a shakeup to push forward with his growth plans.

Scania AB (SCVB) CEO Leif Oestling will join VW’s management board to help forge a truckmaking alliance between Scania, MAN SE (MAN) and the carmaker’s own commercial-vehicles unit, the Wolfsburg, Germany-based carmaker said in a statement today. Current trucks chief Jochem Heizmann will shift to a new board post with responsibility for China, VW’s largest market.

Winterkorn is reshuffling managers as he pushes Europe’s largest carmaker, which reported record 2011 profit, to surpass General Motors Co. (GM) as the world’s biggest automaker. In addition to seeking savings from cooperation between the truck units, the CEO is integrating Porsche sports cars and Ducati motorbikes to widen offerings from exotic two-wheelers to 50-ton trucks. VW owns controlling stakes in Scania and MAN.

“All of the appointments are internal,” Winterkorn said at a press conference in Stuttgart to explain the changes. “It is important to have people in leadership positions who know the company.”

Audi will replace three board members. Ulf Berkenhagen, the purchasing chief at the luxury-car brand, will assume the role of procurement chief at MAN. Berkenhagen will be replaced by Bernd Martens, who currently works in VW purchasing.

Closer Ties

Audi will also replace development head Michael Dick with Bentley chief Wolfgang Duerheimer, and VW brand marketing head Luca de Meo will take over for sales chief Peter Schwarzenbauer, who is leaving the VW group.

VW commercial-vehicles chief Wolfgang Schreiber will move to Bentley to replace Duerheimer as the head of the ultra-luxury marque. All of the changes take effect Sept. 1.

VW has been working for six years on closer ties with MAN and Scania. Volkswagen increased its holding in MAN to a majority in 2011, then raised the stake to 73 percent in April. VW Chief Financial Officer Hans Dieter Poetsch said last month that all options were open, including a domination agreement.

MAN CEO Georg Pachta-Reyhofen, 56, along with his duties running the Munich-based truckmaker, will also join the VW management board with responsibility for the group’s engines.

Pushing Integration

“This makes sense from an integration point of view,” Michael Tyndall, an analyst at Barclays in London, said by phone. “Scania is best in class, and in my mind there’s not a lot of work that needs to be done to improve that business. I think it’s taking some of that expertise and applying it to MAN that’s the challenge. Oestling is a good man to do it.”

Under Oestling, who has run Scania for 23 years, the Soedertalje, Sweden-based company has become an industry leader in profitability, with annual operating profit in the last decade increasing fivefold. The truck and bus maker’s earnings before interest and taxes in 2011 were 12.4 billion kronor ($1.7 billion) compared with 2.47 billion kronor in 2001.

Oestling -- who spent decades eschewing acquisitions and fighting takeovers, including an unsuccessful effort by MAN to purchase Scania in 2006 -- said in 2010 that combining with MAN is necessary to lower costs.

“The important thing here is that we’ll now get a clearer leadership structure for VW’s commercial vehicles,” Oestling, who will move to Wolfsburg, said in a phone interview today. “These are complex industrial companies and it takes time.”

New Scania Chief

Oestling will be replaced at Scania by Martin Lundstedt, the truckmaker’s sales and marketing chief. Lundstedt, 45, has been with Scania since 1992, when he began as a production engineer. He’s held several executive positions at the company, including a stint as production director in France. He has been sales and marketing chief since 2007.

“You shouldn’t expect any big changes,” Lundstedt said in a phone interview. “I’ve been with Scania for 20 years and know the company well. We have a good cooperation with MAN and we’ll continue to develop that.”

Current China chief Karl-Thomas Neumann was passed over for the board post in favor of Heizmann. Winterkorn said today he’s seeking a new role at VW for Neumann.

VW’s Chinese joint ventures plan to invest 14 billion euros ($17.3 billion) in the country through 2016 to expand production. VW will open a new assembly plant in western China as it pushes expansion beyond the country’s bustling coast. Winterkorn signed a contract for the plant in Urumqi during an April visit to Wolfsburg by Chinese Premier Wen Jiabao.

First-quarter earnings from VW’s Chinese joint ventures, which aren’t included in group operating results, jumped 52 percent to 848 million euros. Volkswagen group Ebit in the period gained 10 percent to 3.21 billion euros.

Volkswagen in 2011 boosted operating profit 58 percent to a record 11.3 billion euros.

To contact the reporters on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net; Ola Kinnander in Stockholm at okinnander@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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