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VW Group to be restructured?

by Byron Hurd
VW Group to be restructured?

Leaked plans point to smaller, nimbler business units.

Automotive powerhouse Volkswagen is developing plans to consolidate brands under multiple new holding companies, according to German newspaper reports, signaling the start of a long-expected revamping of Volkswagen's operations.

The restructuring represents both a decentralization and consolidation. Volkswagen is currently structured as a single holding group with each of its 12 individual automotive brands operating quasi-independently (even competitively, in some cases, as was encouraged by former Chairman Ferdinand Piƫch, who lost his seat by a 5-1 vote in April).

Under the proposed structure that was leaked by Reuters, individual brands will be grouped under one of four new holding companies. By volume, the largest company will be that overseeing Volkswagen, Skoda and Seat. The next rung up will be a group comprised of Audi, Lamborghini and Italian motorcycle manufacturer Ducati. The top-tier group will manage Bentley, Bugatti and Porsche.

The fourth group, which doesn't represent a different tier so much as an entirely different sales channel, will oversee the group's commercial vehicle offerings, including MAN and Scania (VW-branded commercial vehicles will also be managed by this group).

While each individual holding company will likely still allow semi-autonomous operation of the brands under its umbrella, the increased interdependence should allow each business unit to respond more quickly and efficiently to larger market changes, rather than forcing each brand to develop independent strategies as market conditions fluctuate. This way, the redundant costs of shifting strategies can be eliminated.