VW Said to Shake Up Management Ranks to Push Growth Goals
Volkswagen AG (VOW) will appoint a new trucks chief, add a top executive to oversee China and replace three members of Audi’s board as part of a management shakeup at Europe’s largest carmaker to push forward with growth plans.
In the highest profile change, Scania AB (SCVB) Chief Executive Officer Leif Oestling will join VW’s management board to help forge a three-way truckmaking alliance, people familiar with the matter said. Scania and MAN SE (MAN), both controlled by VW, surged more than 6 percent on expectations of closer ties.
VW CEO Martin Winterkorn is reshuffling managers as he pushes the Wolfsburg, Germany-based company, which reported record profit last year, to surpass General Motors Co. (GM) as the world’s largest automaker. In addition to seeking savings from cooperation between VW’s truck brand, Scania and MAN, the CEO is integrating Porsche and Ducati motorcycles to stretch offerings from exotic two-wheelers to 50-ton trucks.
“It’s good and sensible to make changes during fat years,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “There are a number of unfinished projects that have been overlooked because of the success of the past few years.”
Scania climbed as much as 6.1 percent to 122.30 kronor and was up 1.9 percent as of 4:06 p.m. in Stockholm. MAN jumped as much as 7.4 percent to 83.09 euros and was up 2.6 percent in Frankfurt. VW traded 3.8 percent lower.
Oestling will leave Scania after 40 years to replace trucks chief Jochem Heizmann, said the people, who declined to be identified because the supervisory board hasn’t signed off on the moves. The changes could be announced as soon as today, they said. VW and Scania declined to comment.
Oestling will be getting help from Audi. Ulf Berkenhagen, the purchasing chief at the luxury-car brand, will assume a new role coordinating procurement among the truck units, a person familiar said. He will be replaced by Bernd Martens, who currently works in purchasing at VW, the person said.
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, the person said. Audi did not return calls and e-mails seeking comment.
VW has been working for six years on closer ties with MAN and Scania. Volkswagen bought a majority holding in MAN 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.
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.
“Leif Oestling has been one of the most important factors in Scania’s development the last several years,” said Christer Magnergard, a DNB Bank ASA analyst in Oslo. “He should be a strong asset to VW when it comes to fostering the cooperation between Scania and MAN.”
New Scania Boss
Oestling will be replaced at Scania by Martin Lundstedt, the truckmaker’s sales and marketing chief, one of the people said. Lundstedt, born in 1967, 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.
VW will also create a new management board post to oversee operations in China, the company’s biggest market, the people said. Current China chief Karl-Thomas Neumann won’t be nominated for the new board post, the people said.
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.
“VW could be thinking that growth could get more difficult and new people could bring new verve,” said Hans-Peter Wodniok, an analyst at Fairesearch in Kronberg, Germany. “The overall strategy isn’t going to change much.”