Blog: Volkswagen rumbles
Dave Leggett | 12 July 2005
All is not at all well at Wolfsburg right now. But it is perhaps not as bad as it seems if it means that the long road to becoming truly competitive is embarked upon. There is a corruption scandal, departing executives and even the operation of the Volkswagen works council is being brought into question. A capacity re-jig could even be in the offing (Brussels). However, all that could provide the ideal backdrop for another deep round of cost cutting and a dose of ‘new realism’ from the management, led perhaps by Wolfgang Bernhard (former cost cutter at DaimerChrysler).
Bernhard has identified VW’s main competitive benchmark as Toyota, rather than Mercedes-Benz or BMW. With Toyota's market gains and ambitions, that makes a lot of sense. Time to drop the Volkswagen premium and get cost down, volume per platform up. He wants cost cutting at the centre of VW’s strategy, rather than any resort to pricing its way out of trouble and moving the VW brand upmarket – a clearly failed strategy symbolised by the Phaeton. Perhaps he can make a beginning on sorting out the brand overlap issues within the group also. But cutting more fat is a start and observers can only hope that it kick-starts a change of attitude more generally within the company. He must be sensing that his time is coming.
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