VW Said to Consider Cutting 3 Executive Posts in Overhaul

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Martin Winterkorn
Volkswagen AG CEO Martin Winterkorn. Photographer: Krisztian Bocsi/Bloomberg

Volkswagen AG is considering eliminating three management-board positions as Chief Executive Officer Martin Winterkorn pushes for a sweeping overhaul of the automaker after surviving a power struggle, according to people familiar with the matter.

Europe’s largest carmaker is examining whether it still needs separate executives for sales, production and the Chinese market, said the people, who asked not to be identified as the plans are private and haven’t been finalized. By delegating such responsibilities to its brands, the German automaker is seeking a break from the centralized management structure under former Chairman Ferdinand Piech.

It’s unclear what the plans would mean for sales chief Christian Klingler, 46, and China head Jochem Heizmann, 63. The production chief job has been vacant since Michael Macht left in August. VW declined to comment on internal discussions.

Since Piech stepped down in late April, Winterkorn has accelerated efforts to streamline the automaker, which has more than doubled its production network under the CEO’s tenure. Funneling decisions through headquarters in Wolfsburg has left VW slow to adapt to trends like the rise of sport utility vehicles. The goal of the reorganization is to become faster and more efficient in a bid to boost sales and profit.

Share Drop

“VW’s core problem remains the lackluster financial performance of the VW brand outside of China,” Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in a note. “Reorganizing brands doesn’t sell a single additional product or generate any value per se.”

The planned remake of VW’s 10-seat management board shows that Winterkorn is looking to move beyond the power struggle with Piech, who was seeking the CEO’s ouster. Since the dispute became public on April 10, VW shares have fallen 18 percent. The stock declined as much as 3.5 percent in Frankfurt trading Monday.

While Piech favored a decision-making approach that relied on a strong leader and a small group of key advisers, Winterkorn is now seeking to give more leeway to the group’s three largest brands -- VW, Audi and Porsche -- as well as to regional chiefs.

Volkswagen intends to finalize the structure over the summer with the goal of getting supervisory board approval at the next scheduled meeting at the end of September, the people said. Plans may also change after Herbert Diess, a former BMW AG executive, joins in July to oversee the VW brand. He could take on oversight of China in this role, they said.

Car Holding

Changes in the group’s top executive ranks already have support from key supervisory-board members. Bernd Osterloh, VW’s top labor leader, has in recent interviews questioned the need for a group sales chief and has also said that the vacant production chief post may not need to be filled again.

Alongside the management shakeup, VW plans to group its passenger-car operations, said the people. The holding structure, which would be similar to one created in May for the heavy-truck units, is set to bundle responsibilities for certain vehicle segments like the mass-market VW, Skoda and Seat nameplates and moving the Bentley and Bugatti marques closer to Porsche, they said.

Winterkorn took over as CEO in 2007 and now oversees a company with 119 factories and nearly 600,000 employees, more than any other automaker. Under his reign, VW has acquired Porsche and Ducati motorcycles and gained full control of heavy-truck makers Scania and MAN.

The VW CEO told about 5,000 top executives in an internal video conference on May 7 that a new leadership model is needed to become more efficient after years of rapid expansion. He started initial efforts to empower regional managers last year.

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