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April 20, 2022

VW Group eyes new re-org and ‘steering model’

A VW Group board workshop has concluded the company needs to become a ‘vertically integrated mobility company’ and re-organize operations across brands.

By David Leggett

A Volkswagen Group board workshop held this week in Berlin has considered new options for the company as it looks to meet new challenges ahead. VW Group CEO Herbert Diess said in a LinkedIn post that it was agreed that a new setup is ‘absolutely mission-critical as we are evolving from a classic OEM to a vertically integrated mobility company’.

Diess said that for VW Group, “our competitors are no longer called Mercedes-Benz AG, Toyota Motor Corporation or Stellantis, but Tesla, Foxconn, Apple, LG Electronics, Uber etc.”

A significant element in the plan appears to be to maximise group strengths across the brands, but with the brands exercising more independence operationally.

The posting also said that VW’s technology platforms – the SSP mechatronics platform, software, battery & charging and mobility solutions – will get “more authority to ensure we can maximize synergies across the group’. The brands, he went on, will also become more independent, without the group getting involved in their operational business and instead focusing on overall strategy and synergies.”

In particular, the Volkswagen brand “will get more power and become fully self-sufficient. Only if we have strong lead brands we can build powerful brand groups and leverage economies of scale.” Diess noted that the volume brands agreed on a plan to move closer together under the leadership of Thomas Schäfer.

In terms of regional structure, Diess said “we came to the conclusion that here, too, we need a group approach if we want to foster growth. This is true for China, where Ralf Brandstätter as new board member will make sure that we take a cross-brand, cross-platform approach. It also needs to be the case in the US, where we aim to raise the group‘s overall market share to 10%. To that end, we will implement an ambitious growth plan as the latest geopolitical changes and increased block-building have been exposing our global vulnerability, particularly with regards to the US.”

Diess also said in the post that “within weeks we will provide a clear direction for the new steering model.” The new steering model will define which responsibilities will go into the group, the brand groups and brands as well as the technology platforms “to avoid duplications and cumbersome alignment processes”.

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