VW shake-up aims to boost growth

Volkwagen has a grand plan for global domination. Photo / AP

Volkswagen chief executive 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 chief Leif Oestling will join VW's management board to help forge a truckmaking alliance between Scania, MAN and the carmaker's own commercial vehicles unit, the Wolfsburg, the Germany-based carmaker said.

Present 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 a record profit last year, to surpass General Motors as the world's biggest automaker.

In addition to seeking savings from co-operation between the truck units, Winterkorn is integrating Porsche sports cars and Ducati motorbikes to widen offerings from exotic two-wheelers to 50-tonne trucks. VW owns controlling stakes in Scania and MAN.

"All the appointments are internal," Winterkorn said. "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 now works in VW purchasing.

Audi will replace development head Michael Dick with Bentley chief Wolfgang Duerheimer, and VW brand marketing head Luca de Meo will take over from sales chief Peter Schwarzenbauer. VW commercial-vehicles chief Wolfgang Schreiber will move to Bentley to replace Duerheimer as the head of the ultra-luxury marque.

VW has been working for six years on closer ties with MAN and Scania. Volkswagen increased its holding in MAN to a majority last year. VW chief financial officer Hans Dieter Poetsch said last month that all options were open, including a domination agreement.

MAN chief Georg Pachta-Reyhofen, 56, as well as his duties running the Munich-based truckmaker, will also join the VW management board with responsibility for the group's engines.

"This makes sense from an integration point of view," said Michael Tyndall, an analyst at Barclays in London.

"Scania is best in class, and there's not a lot of work 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.

Under Oestling, who has run Scania for 23 years, the Sweden-based company has become an industry leader in profitability, with the annual operating profit in the past decade increasing fivefold. "The important thing here is that we'll now get a clearer leadership structure for VW's commercial vehicles," said Oestling. "These are complex industrial companies and it takes time."

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.

The present China chief, Karl-Thomas Neumann, was passed over for the board post in favour of Heizmann.

VW's Chinese joint ventures plan to invest 14 billion euros ($22.4 billion) in the country until 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 per cent to 848 million euros. Volkswagen group Ebit gained 10 per cent to 3.21 billion euros.

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

- Bloomberg