VW Group Restructures Brands Around Core Platforms

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Unless you’ve been living under a rock for the past week, you’d be aware that the Volkswagen Group is embroiled in a scandal involving diesel emissions. The German automaker, Europe’s biggest, has admitted to installing software on some of its TDI ‘clean diesel’ models from the Volkswagen and Audi brands that is designed to circumvent EPA emissions standards for certain air pollutants.

Billions of dollars have already been wiped from the VW Group’s market capitalization as a result, and the automaker could potentially lose billions more through fines and litigation. The scandal has already cost CEO Martin Winterkorn his job, with Porsche boss Matthias Müller promoted to the top role. And it’s likely more senior managers will also be pushed aside, namely those from the automaker’s R&D division.

The crisis has also caused the VW Group to accelerate a restructuring of its numerous brands, a move that’s been in the planning for years. Recall that the VW Group controls more than a dozen brands and has more than half a million employees around the globe. Such complexity is difficult to oversee by a central authority, so the automaker is creating separate units that will focus on specific brands and regions.

For the brands, they will be grouped around core platforms or “toolkits” as they are referred to by the automaker. These toolkits feature standardized technical components for each automotive vehicle segment (volume, premium, sport and commercial vehicles). Consequently, a Porsche brand group with Bentley and Bugatti will be established for the sports car and mid-engine toolkit.

The Audi brand group will keep its current structure which includes Lamborghini, Ducati and design house ItalDesign, and other groups such as those for commercial vehicles, power engineering and financial services will also keep their current structures.

The volume brands Volkswagen, SEAT, and Skoda, meanwhile, will each be treated as a separate group and have a representative on the Group Board of Management. And VW, the largest and most important of VW Group brands, will also get four new regional hubs with greater autonomy. One of these will be a new North American region encompassing the United States, Mexico, and Canada. Each of these regional hubs will have its own local CEO with a direct reporting line to the VW brand boss Herbert Diess.

Finally, responsibility for production will now be decentralized. This is one consequence of delegating responsibility to the brands and regions.

“The new structure strengthens the brands and regions, gives the Group Board of Management the necessary leeway for strategy and steering within the company, and lays a focus on the targeted development of future-oriented fields,” interim chairman Berthold Huber said in statement.

The top level of management at the VW Group will still have some significant responsibilities. These will include company-wide efficiency and future-oriented goals, plus decision making for future product strategy, new business fields, cooperations and holdings, connected car activities, and CO2 reduction strategies.

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