VW / Audi / VW Group Tidbits

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VW reformer Bernhard's future in doubt after Pischetsrieder resigns

Reuters / November 8, 2006 - 8:00 am
 
FRANKFURT -- Surprise news that Volkswagen's CEO will resign at year's end left investors guessing today about what the future holds for top lieutenant and reform driver Wolfgang Bernhard.

Analysts said Bernhard could be a casualty in the fallout from the unexplained departure of CEO Bernd Pischetsrieder, and said they were concerned that VW, Europe's largest carmaker, could lose the focus on cost-cutting he has driven.

Citigroup downgraded the stock to "hold" from "buy", saying both Bernhard and group finance chief Hans Dieter Poetsch -- two top Pischetsrieder allies -- could wind up as collateral damage.

"At worse, the positions of CFO Poetsch, responsible for capital discipline, and VW Brand CEO Bernhard, responsible for driving production savings, could be in jeopardy," it wrote.

VW was not available for comment on the situation.

Chosen by Pischetsrieder to head the VW brand, Bernhard, the 46-year-old restructuring expert with the movie-star looks, has been at the forefront of VW's campaign to slash costs and jobs at the group's troubled western German operations.

Bernhard is responsible for delivering $8.9 billion (7 billion euros) in gross earnings improvements at the VW brand by 2008, and has aggressively looked to prune benefits and extend working hours for the roughly 100,000 workers at the six traditional VW plants in western Germany.

His presence has been seen as a guarantee that the far-reaching changes necessary at Volkswagen would not be hijacked by special interests within the company resistant to surrendering VW's historically cosy system of consensus-based decisions, influenced in part through labor's co-management.

Martin Winterkorn, the head of Audi and protege of powerful VW Chairman Ferdinand Piech, will replace Pischetsrieder, the company said late on Tuesday, Nov. 7.

Markets fear that a Bernhard departure would undermine reforms at a company still recovering from cronyism blamed for a series of scandals last year, which included criminal investigations of bribery, fraud and paid sexual favors.

"If he goes, the stock is going to go way down," an automotive analyst said, declining to be named.

German bank HVB said VW's refusal to explain the CEO's sudden resignation raised the question of whether the focus and cost discipline that Pischetsrieder championed would continue.

Focus magazine of Germany reported that Pischetsrieder, whose contract was just extended six months ago until April 2012, resigned after confronting opposition from five of the six members of the supervisory board's key steering committee, led in particular by all three labor representatives.

CHASED OUT OF DAIMLER

The market had already speculated whether Bernhard would throw in the towel, frustrated by the highly sensitive politics prevalent at a company where 97 percent of its German workers are organized through the powerful IG Metall trade union and labor representatives make up half of the supervisory board.

Bernhard, a no-nonsense manager with little patience for bureaucracy endemic to former state-owned companies such as Volkswagen, has already run into problems with powerful German works councils in the past.

In April 2004, DaimlerChrysler's supervisory board blocked Bernhard from taking over as head of the Mercedes Car Group. The move came just days before he was set to assume the post, amid German media reports that labor was out for blood following reported comments that he called former pearl Mercedes a "restructuring case".

"A change of (Volkswagen) management at the highest level at such a sensitive time will raise questions about deeper internal conflict amongst management," Morgan Stanley said in a note.

"Some investors may speculate that this may hasten Dr. Bernhard's departure from VW and possible return to DCX to head the Mercedes car business, or to rescue Chrysler," the bank continued.

[sirAQUAMAN64]

Man, VW is like a never-ending Days of Our Lives...

Volkswagen CEO quit after board revolt, source says

Reuters / November 8, 2006 - 11:00 am
 
HAMBURG -- The steering committee of Volkswagen's supervisory board voted against CEO Bernd Pischetsrieder in a dispute over the pace of cost cuts at Europe's biggest carmaker, prompting him to step down, a source familiar with the situation said today.

"The decision was six to zero," the industry source said a day after Europe's biggest carmaker surprised markets with news that Pischetsrieder would go at year's end.

Should the full supervisory board agree at a meeting on Nov. 17, Martin Winterkorn, the head of the group's premium unit Audi, will take over as CEO at the start of 2007.

VW refused to give any reason for the change, but the source said Pischetsrieder, 58, threw in the towel after failing to bridge a difficult gap between board members eager to boost VW's efficiency and labor demands to protect jobs.

"The pace of restructuring has not been fast enough. They got into an argument about that and I guess Pischetsrieder got fed up with all these issues, all the back and forth, and he quit," the source said. "That means the pace of restructuring will speed up."

Another source familiar with the situation said he did not think differences over the group's strategy for its commercial vehicles business or the extent of its support for German truck maker MAN's contested bid for Swedish rival Scania were a factor in Pischetsrieder's departure.

VW is the biggest shareholder in MAN and Scania and has been supporting a tie-up.

"I cannot imagine that it played a role," the person said.

Speculation among analysts centered on a possible rift over VW's trucks strategy and on concern that powerful VW Chairman Ferdinand Piech was interfering in management.

"Investors will likely fear that their 'bogeyman,' Dr. Piech, is back in effective control," Citigroup wrote to clients.

Piech is a former CEO of Volkswagen and grandson of legendary VW Beetle developer Ferdinand Porsche. His family controls sports car maker Porsche AG, which is also VW's biggest shareholder.

In a statement, Volkswagen's powerful works council that co-manages the group through its representation on the supervisory board said only that it respected the CEO's decision to resign and thanked him for his work.

"The group directives he introduced lay the groundwork for a change in the corporate culture," the works council said.

It went on to praise Winterkorn as a suitable successor.

"If he were head of a soccer team, we would say of him: 'He motivated his Audi squad to the highest performance level and led it to the top of the tables'," it added in a statement.

Investors were left guessing about possible strategic changes and what the future holds for Wolfgang Bernhard, head of the VW brand group and a top lieutenant in Pischetsrieder's efficiency drive that has cut thousands of jobs in high-cost Germany.

"Corporate governance is definitely an issue at Volkswagen again," Bank Sal Oppenheim said in a research note.

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New Hot-Cold testing facility...
http://www.autoblog.com/2006/11/09/volkswagen-opens-new-cold-and-climate-test-center/

[UmroAyyar]

VW's bumper information display.

http://www.engadget.com/2006/11/09/volkswagen-crafts-electrophoretic-bumper-sticker-road-rage-immi/

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As wacky as Piech is, I'm a huge fan.

Piech likely to push hard for VW clout
Pischetsrieder ouster seen as part of larger strategy

Jason Stein  |   |  Automotive News / November 13, 2006 - 1:00 am
 
MUNICH -- Ferdinand Piech, who engineered the ouster of Volkswagen CEO Bernd Pischetsrieder last week, is eager to increase his family's influence over VW's operations and strategy, sources say.

Piech, 69, heads the family that controls Porsche AG, the German sports car maker that is VW's largest shareholder. He has chaired VW's board of directors since retiring as CEO, a job he held from 1993 until 2002.

But the grandson of the fabled Ferdinand Porsche, designer of the original VW Beetle, has continued to call the shots in Wolfsburg. Pischetsrieder, 58, followed as CEO and has endured frequent disputes with Piech over VW strategy, ownership structure and control of the company.

Audi CEO Martin Winterkorn, 59, takes over as CEO on Jan. 1 - less than seven months after Pischetsrieder's contract was extended by five years.

Nearly a year ago, Porsche paid 3.3 billion euros, or $4.24 billion at current rates, to acquire 20 percent of Volkswagen. Since then Porsche has increased its stake to 21.2 percent and has an option to go to 25.1 percent. Sources say the company may go all the way to 29.9 percent, the most it can own without having to make a full takeover bid.

More clout

Porsche CEO Wendelin Wiedeking, also a member of the VW board, has said he is examining whether Porsche could join a lawsuit challenging a law that guarantees the German state of Lower Saxony a veto over major decisions. Lower Saxony owns 20.75 percent of the carmaker.

The German law, known as the Volkswagen law, prevents any shareholder but the state from holding more than 20 percent of voting rights. The European Union is challenging the law. Increasing its stake would give Porsche a blocking minority for major decisions if the VW law is repealed.

With Pischetsrieder's ouster, industry analysts say it is only a matter of time before Porsche and Piech exert more authority over VW.

"This is all about control," wrote analyst Adam Jonas of Morgan Stanley, of London. "It has become increasingly evident that Porsche's involvement in VW is very long-term and strategic."

Anxious to curtail Porsche's growing influence at VW, Pischetsrieder supported a plan to get German truckmaker MAN to take a 10 percent stake in VW, two VW group insiders said. MAN's stake, together with that of Lower Saxony's 20.75 percent, would have been more than Porsche's 21.2 percent stake in VW.

Stormy session

That was too much for Piech. In a stormy boardroom session last week, the issues came to a head.

"The bottom line is that we didn't like the way Pischetsrieder reacted to our complaints," said one Porsche board member who requested anonymity. "It was what we didn't want to hear. The restructuring was not going fast enough at VW."

The VW sources say Pischetsrieder, who led BMW AG during the 1990s, resigned when he realized he had lost the support of the majority of supervisory board members.

Winterkorn has helped build Audi into a highly profitable maker of luxury cars. He took an active role in development of the A3, the Q7 SUV and the R8 sports car.

"I believe there will be changes at VW," said one VW supplier executive who requested anonymity. "Pischetsrieder was no technology expert, while Winterkorn wants to know every detail and be involved in every decision."

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Won't be long before I hear current VW owners saying I own a Porsche 

Porsche fiscal year profit up 70 percent, will boost VW stake

Reuters / November 15, 2006 - 10:00 am
 
FRANKFURT -- Porsche posted a 70 percent rise in pretax profit in the fiscal year to end-July, the company said today, adding that it plans to raise its stake in Volkswagen to 29.9 percent.

High demand for the popular 911 series as well as its all new Cayman S mid-engine coupes lifted earnings to a record $2.70 billion (2.11 billion euros) before taxes, easily beating the average estimate of 1.58 billion euros from a Reuters poll of 18 analysts.

Porsche proposed to hike its dividend to 6 euros, or $7.68 at current exchange rates, per preferred share, as well as issue a additional special payout of 3 euros, or $3.84, per share.

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Report: VW brand chief Bernhard considers resigning

Reuters / November 14, 2006 - 9:00 am
 
FRANKFURT -- Volkswagen brand chief and reform driver, Wolfgang Bernhard, is seriously considering stepping down after the carmaker appointed Martin Winterkorn as future Volkswagen AG CEO, a newspaper said today.

Quoting company sources, business daily Handelsblatt said Bernhard had already in May threatened internally to resign if Winterkorn became CEO.

Volkswagen last week appointed Winterkorn, the head of Audi, as new CEO, replacing Bernd Pischetsrieder, who will resign at the end of the year.

The paper said Volkswagen's supervisory board would like to keep Bernhard but that relations between him and Winterkorn were cool.

The firm declined to comment on the report.

Chosen by Pischetsrieder to head the VW brand, Bernhard has been at the forefront of VW's campaign to slash costs and jobs at the group's troubled western German operations.

Bernhard is responsible for delivering $9 billion (7 billion euros) in gross earnings improvements at the VW brand by 2008, and has aggressively looked to prune benefits and extend working hours for the roughly 100,000 workers at the six traditional VW plants in western Germany.

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As the World Turns...

Report: VW brand chief Bernhard to resign Thursday

Reuters / November 15, 2006 - 2:00 pm
 
FRANKFURT -- Volkswagen brand chief Wolfgang Bernhard is expected to tender his resignation on Thursday, Nov. 16, when the six-member steering committee of the carmaker's supervisory board meets, a German newspaper reported.

Without citing sources, the Frankfurter Allgemeine Zeitung wrote that the VW brand chief is reacting to a boardroom coup that threw out CEO Bernd Pischetsrieder and replaced him with a rival executive, Audi boss Martin Winterkorn.

A reshuffle of senior level management planned by Winterkorn could drastically impinge on Bernhard's authority in the group.

Volkswagen declined to comment on the report.

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Lower Saxony seeks allies in VW power spat

Reuters / November 15, 2006 - 9:00 am
 
FRANKFURT -- Lower Saxony state premier Christian Wulff is lobbying foreign asset managers to buy shares in Volkswagen and become allies in a boardroom battle for control of the carmaker, a German magazine reported today.

Stern magazine said Wulff, whose German state is Volkswagen's second-biggest investor after sports car maker Porsche, was encouraging U.S. financial investors to buy VW shares and was in regular contact with leading foreign fund managers.

Wulff's office declined comment.

Porsche, controlled by the family of VW Chairman Ferdinand Piech, has a 21.2 percent voting stake in VW and has not ruled out increasing its stake to near 30 percent.

Piech and Wulff, who is a member of VW's supervisory board, have often crossed swords over Volkswagen.
 

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This is a worthwhile read...
http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20061115/OPINION03/611150430/1148/AUTO01

VW silence on CEO’s demise spurs rumors

It could only happen in Germany.

More than a week has passed since the shock resignation of Volkswagen CEO Bernd Pischetsrieder, just six months after he was considered the ideal man to lead VW's restructuring programme with the renewal of his contract for 5 years.

Since the announcement, there has been not a word of explanation from VW. This is what the official announcement said:

"The Presidium of the Supervisory Board of Volkswagen and the Chairman of the Board of Management, Dr. Bernd Pischetsrieder, have agreed upon his resignation effective from Dec. 31, 2006."

A couple of lines then went on to say who the replacement was, and when the next board meeting would take place, (Nov. 17), but absolutely nothing more. Not even a token word of thanks.

The use of the word "Presidium" reeks of a hangover from the Soviet Union, and points to the fact that VW has always had a problem communicating its thoughts to the world. This is probably due to the fact that its management is so tangled, so Byzantine, so opaque, that there is probably never one person who really knows what's going on anyway.

Professor Karel Williams of Manchester University's Business School puts it this way.

Kremlinology

"Giant companies should produce a narrative of purpose and achievement, but VW gets rid of its CEO without comment. VW- watching is something like Kremlinology in the 1960s and 1970s, where we have events often involving exits and the watcher has to make sense of what this means for the factions and alliances whose objectives and tactics are often not clear," Williams said.

VW, Europe's biggest car maker, has a management structure that is complicated by American standards, but not by German ones.

Trade unions are an integral part of the German corporate structure, often with 50 percent of the board room power. Institutional shareholders like banks hover in the background wielding influence quietly. To add to VW's complications, the German federal state of Lower Saxony has a shareholding close to 20 percent, while Porsche is the biggest shareholder with 21.3 percent. Just to make it really confusing, a German law, known as the VW Law, forbids shareholders other than Lower Saxony voting with more than 20 percent of the equity, irrespective of what they actually own. This makes VW takeover proof, for the time being.

Wolfsburg silence

Pischetsrieder's demise set off a firestorm of rumors and questions, which gathered pace as the silence from VW headquarters in Wolfsburg remained deafening. What would happen to the restructuring programme of job losses and wage cuts put together so painstakingly by Pischetsrieder and his sidekick Wolfgang Bernhard? Was this a power play by former CEO and now VW board chairman Ferdinand Piech to reassert control over VW? Would Bernhard stay? Was this the prelude of a takeover bid for VW by Porsche, controlled by the Piech family? Perhaps the most eye-brow raising theory reckoned that this was a ploy by Porsche to buy VW's premium brand and BMW and Mercedes competitor, Audi?

Pischetsrieder's demise was all the more puzzling because investment bankers acclaimed his tenure as being a great success in tough conditions. They wondered if his successor, Audi chief Martin Winterkorn, a favourite of Piech, had the skills or the motivation to carry on the restructuring. Piech is a grandson of legendary VW Beetle developer Ferdinand Porsche.

Some investment bankers advised investors to dump VW shares, and worried about VW's future. Many thought the Pischetsrieder affair showed Porsche influence at VW, initiated when it bought its stake last year, was gathering pace.

Others wondered what would happen to Bernhard, VW brand chief, who was hired from Chrysler to lead the restructuring programme at VW and involving the loss of more than 20,000 jobs so far.

In report headlined "Coup de Piech", Merrill Lynch said the appointment of Winterkorn will strengthen Piech's influence over VW.

Sell VW shares

"This will not meet with universal approval," Merrill Lynch said archly, as it reiterated its advice to investors to sell VW shares.

Investors are worried that the VW restructuring program will be watered down, and the likes of Citigroup, which had been impressed by the progress so far, suddenly washed its hands of the company.

"With Dr. Pischetsrieder's resignation, we believe the "investing in restructuring" case at VW can't be sustained, in any event shares were reaching close to our value-based limits. We do not envisage a Porsche takeover of VW, as some interpret recent events," Citigroup said.

VW's share price is close to an 8-year high.

Earlier this year, before Bernhard's restructuring hit high gear, Citigroup summed up VW's problems like this.

Fertile restructuring field

"VW should be the most fertile field for auto restructuring, with capacity use of 72-73 percent in Europe, and a labour force 15,000 to 20,000 too high being paid 20 percent above engineering norms."

John Lawson, Citigroup auto analyst, said Pischetsrieder's departure was not good news.

"At the least, the power struggle which has likely sunk Dr. Pischetsrieder could destabilise management; at worst, the positions of Chief Financial Officer Poetsch, responsible for capital discipline, and VW Brand CEO Bernhard, responsible for driving production savings, could be in jeopardy. Investors will likely fear their "bogeyman" Dr. Piech is back in effective control," Lawson said.

Pischetsrieder took over from Piech as VW CEO in 2002, when profits quickly collapsed under the weight of dead-end programmes like the VW Phaeton luxury car he inherited. VW pulled the Phaeton from the U.S. market in 2005. Piech had also involved VW with other luxury car and sports car projects with little relevance to the success of a mass car manufacturer, including the purchases of Bugatti, Lamborghini and Bentley.

Meanwhile, VW's day job, making family cars cheaply, efficiently, and profitably, was faltering. Earlier in 2006, VW admitted it takes twice as long - 48 hours - to assemble its important Golf V sedan than a direct competitor, the Renault Megane.

VW law

Lawson doubted the logic of Porsche buying more shares than the 21.3 percent it currently owns because of the "VW law" restrictions. The European Union is seeking to overturn the VW law, but this could take upwards of 2 years.

Porsche has an option to raise its stake to 25.1 per cent, and hasn't ruled out going to 29.9 percent (the maximum stake before triggering a takeover bid).

Lawson wondered if the disagreement which led to the end for Pischetsrieder might have been over the policy of seeking a takeover deal for German truck maker MAN of its Swedish rival Scania. VW is the largest shareholder in both companies.

"It could be related to Dr. Pischetsrieder's possible attempts to neutralise the apparently increasing influence of Porsche and Dr. Piech in VW management, or it could be a prelude to some kind of takeover by Porsche. With the resignation, a significant degree of uncertainty on management commitment to the restructuring measures appears. Second, the apparent re-empowerment of Dr Piech, a former CEO whose cash profligacy is unlikely to be supported by investors," said Lawson in the report.

Porsche wants Audi?

VW's restructuring programme so far has netted 11,000 early retirements and 5,700 voluntary redundancies, and the company is on course to cut 20 percent of its about 100,000 German workforce.

Dresdner Kleinwort floated the following intriguing suggestion.

"Porsche wants Audi and might trade its VW stake for an Audi stake."

Dresdner Kleinwort didn't elaborate.

Goldman Sachs is a bit more sanguine about VW's prospects, even though it believes the Pischetsrieder affair resulted from a significant difference on strategy and growing influence of Piech.

"Nearer term, we would not rule out Porsche increasing its stake in VW to 29.9 percent ahead of the EU's 2007 decision on the VW law. Some observers may view the CEO's departure as a return to the VW of old, but we believe VW is on track to achieving its 2008 pre-tax profit target of 5.1 billion pounds," said Goldman Sachs.

Morgan Stanley also feels that the Pischetsrieder dismissal isn't necessarily a bad thing.

"Does this suggest the VW turnaround is hitting a snag? No. We do not believe the management change should be interpreted as a fundamental move," said Morgan Stanley.

But Emmanuel Bulle, auto analyst with Fitch Ratings in Paris, believes that the Pischetsrieder shenanigans doesn't bode well for VW.

Demotivation

"Although I do not expect a U-turn in the group's strategy, it is yet another blow to management's stability, which is usually a supporting factor for a company. Frequent management changes are a strong negative driver for a company and can lead to changes in or inconsistent strategy, loss of investor confidence, lack of real commitment and a fight for responsibility between divisions and staff demotivation," said Bulle.

Manchester Business School's Williams fears for the VW turnaround plan.

"The standard media line is that Pischetsrieder's departure is the consequence of an unholy tactical alliance between Piech/Porsche and VW labour unions, whose long term interests surely do not coincide. There is an impasse at Wolfsburg and no champion of change. The deal on VW hours reduction and Wolfsburg job security was pretty soft on labor, and if Bernhard goes, the media line must be right," he said.

Meanwhile Morgan Stanley summed up the incredulity that most observers seemed to feel when the news about Pischetsrieder hit markets, with this tribute.

"In all fundamental regards - restructuring, communication, leadership - we believe Dr. Pischetsrieder has executed well in a tough environment," said Morgan Stanley.

Which just reinforces the question - why did he go?

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Audi adjusts to American way

Carmaker wants to widen reach of its U.S. market with more provocative advertising.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Audi of America is mounting an effort to reshape its image away from world-class German engineering to be "more American," its top U.S. executive said Wednesday.

Johan de Nysschen, executive vice president in charge of Audi of America -- the Auburn Hills subsidiary of German-based Volkswagen, said the company wants to reposition its brand as it targets two key growth areas: North America and Asia, especially China, India and Japan.

"The U.S. is not a province of Germany," de Nysschen said, saying the company needs to be "more American" in its marketing strategy -- more provocative and less about simply German engineering.

"We need to be a little more bold and little more American" and drop European reticence about self-promotion, de Nysschen said. "We need to punch him on the nose."

Last week, Audi held a first round of talks with advertising agencies and will hold a final round in Los Angeles next month. It plans to announce its choice of advertising agency before the end of the year.

Edward A. Riordan, a professor of automotive marketing at Wayne State University, said Audi's strategy is similar to what BMW has tried to do.

"BMW is the model for this campaign," Riordan said. "They've exhausted the German engineering shtick and the natural movement is to combine lifestyle with performance."

Audi plans to sponsor events like fashion shows as it emphasizes the lifestyle of Audi owners. Its customers are mostly self-made affluent people who are younger and more likely to have a college-degree than those of its well-heeled luxury competitors, he said.

"We know who our customers are; we just need more of them," he said.

Audi is a company run by engineers; there is even a "nose team" to ensure that new Audis smell like Audis should smell, he said.

U.S. Audi sales are up 4.1 percent this year and the company is on track to report its best-ever U.S. sales year, with around 85,000 vehicles sold.

The company expects to sell about 90,000 vehicles next year as it rolls out a second-generation TT among other new vehicles. Worldwide, Audi sales are up 8.7 percent, with 757,700 vehicles sold; it hopes globally to sell 1.4 million vehicles annually by 2015.

Between 2005 and 2007, Audi is introducing 19 new products. A decade ago, it had four models and four derivatives; by next year it will have eight models and 20 derivatives.

Audi is also opening Audi Forum stores to emphasize the experience of driving and owning an Audi; it opened its first U.S. Forum in New York City in October and will open one in Tokyo this year. It will open another 11 worldwide next year.

It also will introduce at least one more SUV and possibly a third, among several new models. Audi also plans to announce a new diesel vehicle at the Los Angeles Auto Show later this month, with de Nysschen saying that diesel was a better way to end oil dependence than hybrids or vehicles that run on biofuels.

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New Volkswagen CEO has support of Piech, unions

Reuters / November 17, 2006 - 1:00 pm

 
FRANKFURT -- Audi boss and incoming Volkswagen AG CEO Martin Winterkorn is likely to have an easier time running the group when he takes over next year than his unlucky predecessor Bernd Pischetsrieder.

The successful head of Audi is a loyal lieutenant to Volkswagen Chairman Ferdinand Piech and is seen by analysts as the choice candidate of labor representatives on the VW supervisory board, who helped kick out Pischetsrieder last week.

Faced with job and wage cuts, the VW brand's near 100,000 western German unionized workers hope Winterkorn's sense for hot products at Audi will translate to VW, helping the brand grow out of its troubles without further slashing costs.

Speculation has swirled repeatedly that Piech was laying the groundwork to install his protege as CEO, but Winterkorn had to wait since his ties to the chairman made him suspect to the German state of Lower Saxony, which controls some 20 percent of VW's voting rights.

Only after Porsche, the largest VW shareholder with 27.4 percent and partly owned by Piech, threw its weight behind Winterkorn could the VW chairman together with labor unseat Pischetsrieder.

Born near Stuttgart and trained as a metallurgist, Winterkorn took over Volkswagen's premium Audi division in 2002 after previously serving as head of technical development at Volkswagen, where he developed a reputation among analysts for overengineering cars with too much unnecessary content.

Apart from overseeing the design of the Golf, formerly a cash-cow but now a loss-maker due to its complex construction, the passionate engineer ran Piech's pet project: developing the Phaeton sedan.

EXPENSIVE FLOP

While industry analysts have praised the car, the first VW brand competitor to the Mercedes-Benz flagship S class became an expensive flop for Volkswagen and Pischetsrieder pulled it from the U.S. market due to the heavy incentives it had to offer to unload the model.

The love of technology that Winterkorn shared with his mentor served him better at Audi, where premium car buyers were keen to pay more for the latest in cutting-edge design.

Winterkorn has helped develop Audi into the No. 3 German premium brand behind BMW and Mercedes-Benz. Audi has raised its sales forecast twice this year and now aims to sell 900,000 units in 2006 and 1.4 million a year by 2015.

Achieving record numbers year after year, he has been able to use the already strongly-positioned Audi brand within a growing premium market to outshine Pischetsrieder, who has had to struggle with stagnant demand in the mass volume segment, battling with German unions over restructuring and a product portfolio that emphasized its high-end cars.

Angered by the steps Pischetsrieder had taken, the VW chairman said in an interview in March that the 10 supervisory board members representing labor were united in opposition to Pischetsrieder and he didn't know of a single company where the CEO could survive under those conditions.

Analysts then surmised that Winterkorn would represent the long arm of Piech, strengthening the influence of the already powerful grandson of legendary VW Beetle designer Ferdinand Porsche.

Other than a stint at German automotive supplier and appliances group Robert Bosch GmbH after earning his doctorate, Winterkorn, 59, has spent his entire career at Volkswagen.

A soccer fan who when growing up wanted to be goalkeeper for the German national team -- and who says he supports Bayern Munich (which Audi sponsors) and his boyhood team VfB Stuttgart -- Winterkorn is married and has two children.

_______________________________

Report: VW's Piech holds back management reshuffle plan

Reuters / November 17, 2006 - 9:00 am UPDATED: 11/17/2006 3:29 P.M.
 
FRANKFURT -- Volkswagen's chairman held off presenting a management reshuffle plan at a supervisory board meeting today after criticism from some board members of the abrupt dismissal last week of the carmaker's CEO, a German newspaper reported.

The Frankfurter Allgemeine Zeitung said Chairman Ferdinand Piech's surprise coup to install his chief lieutenant, Audi brand boss Martin Winterkorn, as the new CEO had met such opposition from shareholder representatives on the board that he decided not to present the plan to change management.

Volkswagen declined to comment.

Supervisory boards of big German companies are made up of both shareholder and labor union representatives. The latter group supported the ousting of CEO Bernd Pischetsrieder.

Piech and Winterkorn want to centralize VW's management and add more members to the management board to head up sales and development. The move would force out Wolfgang Berhard, Pischetsrieder's head of the Volkswagen brand who has aggressively been restructuring the brand to the displeasure of Piech's labor allies on the board, the newspaper reported.

The newspaper, citing well informed sources, said four board members had abstained from voting on Pischetsrieder's removal.

Since Piech has the support of the 10 labor representatives who comprise half the board as well as two representatives of main owner Porsche, the management reshuffle plans will likely pass at the next board meeting, the newspaper said, adding that Bernhard was expected to resign at that point.

Volkswagen's statement released after the supervisory board meeting made no mention of plans to reshuffle management.

Car industry analysts have said a departure by Bernhard would bode ill for Volkswagen, whose shares have outperformed sector peers after it launched a cost-cutting drive masterminded by Pischetsrieder and Bernhard.

The job losses that are part of that effort have been criticised by the supervisory board's labor union representatives.

[sirAQUAMAN64]

VW wants Bernhard to stay
Carmaker seeks new post for VW brand boss

Henning Krogh  |  Guide Reinking  |  Automobilwoche / November 20, 2006 - 1:00 am
 
WOLFSBURG, Germany -- The buzz last week was that Wolfgang Bernhard was as good as gone from Volkswagen after the ouster of his boss, VW CEO Bernd Pischetsrieder.

Not so fast. VW executives are looking for a way to persuade the former Chrysler boy wonder to stay.

On Friday, Nov. 17, VW group's supervisory board named Audi CEO Martin Winterkorn as group CEO starting Jan. 1. He replaces Pischetsrieder, who lost a power struggle this month with supervisory board Chairman Ferdinand Piech.

Bernhard, who heads the VW brand group -- which includes VW, Skoda, Bentley and Bugatti -- did not quit Friday as expected by German news media.

"We would be happy if Bernhard stays on under the new leadership," a supervisory board member told Automobilwoche, which, like Automotive News, is published by Crain Communications Inc.

Bernhard, former COO of the Chrysler group, left DaimlerChrysler in 2004 when his promotion to the top job at Mercedes-Benz was withdrawn. He joined VW that year.

Pischetsrieder's sudden departure was expected to lead to Bernhard's resignation. Winterkorn reportedly wants to head the VW brand unit in addition to being group CEO. But VW is trying to find a top management post that Bernhard will accept.

After Friday's board meeting, Bernhard and Winterkorn flew together to the Beijing auto show to present new VW and Audi models.

The relationship between the two men is said to be cool. Bernhard had been considered a candidate for the job of VW group CEO. The financial markets believe Bernhard's presence will help assure that VW will continue with its restructuring program.

[sirAQUAMAN64]

Volkswagen to end Golf production in Brussels
4,900 staff to be cut to 1,500

Reuters / November 21, 2006 - 8:00 am UPDATED: 11/21/06 9:00 A.M.
 
BRUSSELS/FRANKFURT (Reuters) -- Volkswagen will stop building the best-selling Golf at its Brussels plant as soon as possible and cut thousands of workers in a country that is rapidly losing blue-collar jobs.

Volkswagen Brussels has started talks with employee representatives on a plan "under which the Golf will no longer be manufactured at three plants in western Europe, but at two -- Mosel and Wolfsburg in Germany," it said in a statement today.

The carmaker confirmed an earlier Reuters report that negotiations between management and labor aimed to reduce the 4,900 staff in Brussels to just 1,500 employees.

"For me, this means unemployment, quite simply. I don't understand this, and the government has nothing to say against it," said Johnny Paternoster, a worker at the plant, who had joined other picketing VW workers outside the factory.

Manufacturing jobs are scarce in Brussels, where over 20 percent are out of a job, and Volkswagen is one of the biggest private employers in the city.

The last big blow to Belgium's auto industry was in 1997, when French carmaker Renault closed the Vilvoorde plant in the suburbs of Brussels, cutting about 3,100 workers.

Belgian Prime Minister Guy Verhofstadt was expected to hold a media conference about Volkswagen's plans, which would leave major auto production only at Ford's plant in Genk, Volvo's in Ghent and General Motors' Opel plant in Antwerp, where it builds the Astra compact, a rival to the Golf.

National radio reported that Corinne De Permentier, the mayor of the Forest city district where the Volkswagen factory is located, said she was worried that workers angry about job losses might resort to violence.

"It's a national catastrophe in terms of economy and employment," she said, questioning whether Polo production would be enough to keep the plant over the long run.

ANTWERP ENDANGERED

"We plan to end production of the Golf in Brussels as soon as possible within the framework of existing legal and contractual obligations," a spokesman for the group said.

Golf volumes will remain stable, though, with production just being shifted to Germany, according to Volkswagen.

Since this would help secure jobs particularly at VW's main plant in Wolfsburg, the move has heightened tensions between workers in Belgium and Germany, despite publicised shows of solidarity from the group's works council boss.

One official from the socialist FGTB trade union in Belgium was quoted in the Sueddeutsche Zeitung paper as accusing his German colleagues at IG Metall of "betrayal".

Volkswagen, which wants to cut up to 20,000 jobs in its German VW brand operations, said its western European plants were not running at full capacity despite a rise in market share, and capacity had to be aligned with the saturated car market.

"Following these cuts in Germany, other locations must now be incorporated into the restructuring program so as to ensure competitive production and capacity utilization at the Volkswagen plants in Western Europe as a whole," it said.

The spokesman confirmed that it would have to consider restructuring in other plants such as its Pamplona site in Spain, but added that this did not mean job cuts per se.

The carmaker aims to cut its production capacity in western Europe by 20 percent. Volkswagen has installed enough global capacity that it could theoretically build 6.43 million cars annually, but it only manufactures 5.14 million.

Volkswagen reaffirmed it would not close the Brussels plant, and added it would seek a socially responsible settlement for the workers affected by the restructuring.

"If they're going to stop Golf production in Belgium, then it would be catastrophic, and thousands of people will lose their jobs," said Jesus Manchego, another VW worker braving the rain outside the Brussels plant to protest against the cuts.

De Tijd of Belgium reported that Volkswagen would allocate more production of its Polo subcompact to its Brussels plant, where it makes about 194,000 Golfs and 10,000 Polos a year.

The Belgian press also reported that rival carmaker GM envisages eliminating up to 1,000 jobs in its plant in Antwerp, the country's second-largest city.

While a spokeswoman for GM Europe said it was too early to discuss staff cuts, a union official for Opel Belgium, Luc Van Grinsven, said: "We are in overcapacity for the Astra next year; how this will be resolved is not decided yet."

[safristi]

Vot eez dees TEED_BEETS..ya keep referencing...Sugar!!!

[sirAQUAMAN64]

VW will add new members to Polo family of vehicles
Minivan, Roomster-style and coupe cars are planned

Jason Stein  |   |  Automotive News Europe / November 27, 2006 - 1:00 am


--------------------------------------------------------------------------------
Little cars, big numbers
Europe's top-selling small cars through 9 months (2006 vs. 2005)
1. Renault Clio 339,828 243,237
2. Peugeot 206/207 330,347 333,163
3. Fiat Grande Punto/Punto 314,943 195,009
4. Ford Fiesta 280,048 258,134
5. VW Polo 218,754 204,888
6. Opel/Vauxhall Corsa 208,914 229,243
7. Toyota Yaris 183,767 168,777
8. Citroen C3 166,293 189,262
Source: JATO Dynamics
 
MUNICH -- Volkswagen will add more Polo variants when the fifth-generation of the small-segment car arrives between 2008 and 2009.

According to industry and company sources, there will be three new versions of the next Polo:


A three-door, coupe-style vehicle


A high roof, five-door version based on the Roomster, which is sold by Czech sister brand Skoda


A five-seat minivan called the Polo MPV to fight the Opel Meriva.


The Polo is the VW brand's No. 3 seller in Europe after the Golf lower-medium and Passat upper-medium cars. It is No. 5 in Europe's small-car segment. (See table)

Other members of family

Currently, VW offers the Polo as a three- or five-door hatchback, and in some markets as a four-door sedan.

VW also offers the CrossPolo, which has body side cladding that gives it an SUV-like appearance as well as the fuel-sipping Polo BlueMotion and the high-performance Polo GTI.

VW executives believe the Polo needs more variants to make the car more attractive in the growing small-car segment and to position it against stronger competitors such as the new Renault Clio, Peugeot 207 and Opel/Vauxhall Corsa.

Mark Fulthorpe, director of European forecasts at analyst CSM Worldwide's London office, said VW's move to diversify its small-car lineup is further proof that niche vehicles will be important to boost sales in the future.

"If traditional western European automakers continue to lose share to Japanese and Korean manufacturers," Fulthorpe said, "then they are going to have to be the leaders in terms of niche development." 

[safristi]

 VW TidBITS  didya KNOW Jon Titslinger INVENTED the BRA...?  TRUE...Before that guys had ta hold them UP in restaurants...... wot a bastard......

[sirAQUAMAN64]

From the Essen Motor Show, VW Individual's new R-Line models...
http://www.vwvortex.com/artman/publish/vortex_news/article_1877.shtml

They ALL look great, including the Touran, Touareg, and the pint Polo GTI Cup. Love how tastefully simple, classy, elegant-yet-sporty they all are. 

If we could only get R-Line or Individual here.

[Rabbit Girl]

VW's bumper information display.

http://www.engadget.com/2006/11/09/volkswagen-crafts-electrophoretic-bumper-sticker-road-rage-immi/

You know, I though of this a long time ago but I also thought about the "mean" factor in it as well. It would be nice to have some LED screen in your rear window that could convey how your feeling but it would also creat A LOT of fights!!!

I would almost be afraid to use it being a single girl in the car that, that some freak would take it the wrong way or not get the "real message" and follow me home or something.

I think it would be nice but also bad. I'm kind of hoping it won't happen unless they made them to limit what could be said on them. Maybe things like "I'm having a great day", Have a great day" etc...

[Rabbit Girl]

Volkswagen to end Golf production in Brussels
4,900 staff to be cut to 1,500

Reuters / November 21, 2006 - 8:00 am UPDATED: 11/21/06 9:00 A.M.
 
Reuters is a good source...you may even find a different view on things on this German website I read frequently. Just type in Volkswagen and it will bring up a list of all of the articles they have written in the past about VW.

http://www.dw-world.de/dw/0,,266,00.html

[Rabbit Girl]

Just thought I'd start a thread with general VW info as I tend to come across what I think is interesting stuff but don't want to start an assortment of different threads.

VW wants twice as many owners to stick with brand

Laura Clark Geist  |   |  Automotive News / October 2, 2006 - 1:00 am
 
DETROIT -- Volkswagen wants to double the percentage of its owners who stay with the brand for their next vehicle purchase.

The Volkswagen brand's 29.3 percent loyalty rate for 2005 was well below the 49.6 percent rate for all automotive brands, according to J.D. Power and Associates.

Kerri Martin, VW's director of brand innovation, said she is determined to elevate VW's loyalty rate to 60 percent. She didn't offer a time frame but said she plans to rely largely on customer marketing events and an improved Web site.

"For a brand that has an enthusiast base that is as loving of the brand as they are, our loyalty is not where it should be," Martin told Automotive News. "We can't afford to conquest nearly 71 percent of our annual volume anymore. Current customers are a brand's best currency."

In 2001, the VW brand had its best U.S. sales year since 1973, with 355,648 retail vehicle sales. A year later, the brand recorded a 41.6 percent loyalty rate, says Neal Oddes, director of product research at J.D. Power and Associates.

After that, though, VW sales went into a tailspin. Quality problems compounded the company's failure to refresh its lineup and match competitors' incentives.
 


--------------------------------------------------------------------------------
Ones that got away
A survey of more than 100,000 former U.S. Volkswagen owners who switched brands last year found that these were the new vehicles they bought most often.
1. Toyota Corolla
2. Toyota Prius
3. Subaru Forester
4. Toyota Highlander
5. Nissan Altima
6. Honda Element
7. Honda Odyssey
8. Toyota Sienna
9. Scion xB
10. Honda Pilot
Source J.D. Power and Associates
 
Note many of the VWs were traded in on vehicles roomier than any of VW's current North American offerings. If VW sold the Touran, or maybe even the Golf Plus, I bet they could retain a whole lot more buyers. Still maintain it'd do much better than the upcoming badge engineered DCX VW maxi-minivan too, as it's an alternative vehicle much like the Forester/Prius/Element/xB on the list. I can't for the life of me understand why they won't try it.
--------------------------------------------------------------------------------

Sales rise after slump

Last year, Volkswagen sold 224,195 cars and trucks in the United States, a 37.0 percent decline from 2001. From January through August of this year, VW recorded U.S. sales of 162,092 vehicles, a 14.7 percent increase over the year-ago period.

Martin conceded that VW's failed effort to penetrate the luxury market with the Phaeton sedan also confused some buyers.

"The key is, how do you take those difficult experiences and turn them into positives?" Martin said. "That's what we're on a mission to fix."

To keep more VW buyers in the fold, the company is holding customer events across the country.

An event called Water Fest drew 20,000 owners of VW vehicles and classic cars to Englishtown, N.J., last July. Enthusiasts played hubcap Frisbee, raced slot cars, saw new vehicles on display and learned German from recordings piped into restrooms. "Helga" - the blond, leather-clad German actress who appears in GTI TV commercials - greeted fans and posed for pictures.

Martin has created the post of director of experiential marketing to maintain a consistent brand message across what she calls VW's "consumer touch points." Filling that role is former VW Marketing Director Karen Marderosian.

Virtual garage

VW also is revamping its consumer Web site, www.vw.com, to make it more interactive, Martin said. VW owners are second only to Mini customers in using the Internet to research vehicle purchases, she added.

Among the features Martin plans for the site is an upgraded Volkswagen Garage, where buyers can configure a new VW with options.

Gordon Wangers, an auto analyst in Oceanside, Calif., says Martin's goal of doubling customer loyalty is "admirable but possibly unrealistic." He notes that VW aims its edgy advertising and marketing strategies at younger buyers, who tend to show less brand loyalty than older customers.

"That buyer is going after the 'What's the cool?' 'What's the hip?' 'What's the now?' " Wangers says. "Usually tomorrow, that's something else."

But Martin said she wants to regain the loyalty of customers who bought New Beetles, Passats and Jettas in large numbers in the late 1990s. Those cars helped make Volkswagen one of the hottest auto brands - with one of the youngest customer bases - in the industry.

"Clearly, with loyalty at 29 percent, they've gone somewhere," Martin said. "We need to find a balance of whom we can engage in another conversation with and bring them back to the brand, and where are we going to have to conquest from."

Price concerns

Larry Holbert, a VW dealer in Warrington, Pa., says many former VW owners have migrated to Korean brands.

"They are going to Kias and Hyundais because of the prices," Holbert says. "Some people who are getting out of Volkswagens can't afford to buy a new one because of the price jump in the last 10 years."

J.D. Power's Oddes says the 10 vehicle models that VW owners are most likely to defect to are all Japanese. Some, he says, are in segments in which VW doesn't have a model, such as minivans.

In the absence of a full product lineup, Martin is emphasizing marketing - and fun. Owners of new GTIs, for example, get a doll-sized version of VW's "Fast" advertising character. The doll has become so popular that it commands prices of $1,000 or more on eBay.

Volkswagen is selling a smaller version of the doll, called Fast Jr., for $35 at owner events and on its Web site. A Fast key chain sells online for $15.

Martin said the next step in the loyalty campaign is applying to all VW models what the company has learned from its experiential marketing of the GTI and Jetta. In the longer term, Martin said, she seeks a low-priced SUV and a microbus.

"When (buyers) come back in the market," Martin says, "we want Volks- wagen to be number one on their shopping list."

I thought VW's spot at the Detroit show was priceless. Too bad they're giving it up.

VW decides to go low-key

Edward Lapham  |   |  Automotive News / October 3, 2006 - 11:35 am
 
One of the more intriguing aspects of the Paris auto show was that neither Volkswagen nor Audi held formal press conferences, despite having some swell hardware on their stands.

Audi showed the R8 supercar, a midengined V-8 two-seater that looks every part a Ferrari-beater, and VW showed the Iroc concept that's expected to be the new Scirocco.

Instead of big to-dos on their stands, Audi and VW earlier unveiled the cars to smaller groups of reporters off-site then parked the cars at the show for everybody else to see.

For the Volkswagen brand, at least, it's part of a new communications strategy to avoid getting lost in the hoopla generated by larger automakers and the big international shows.

At the Los Angeles show in November, VW likely will do an off-site intro for an SUV concept and a couple of special-edition models.

But in January, at the North American International Auto Show in Detroit, VW doesn't plan to do much at all. VW even has given up its unique corner position that amounted to a two-level stand because it included floor space on the main floor and in the lower-level Michigan Hall, which was connected by an escalator

The buzz in Paris was that the new, low-key approach comes from VW brand honcho Wolfgang Bernhard, who once rode a V-10-powered Dodge motorcycle onto the Chrysler group's stand in Detroit.

It's not that he has lost his moxie. According to someone who was there, Bernhard introduced the Iroc by racing it around a makeshift wooden track set up in an airplane hangar in Berlin -- and he did it in the dark.

He just has a different plan.

So who gets the two-level stand? Nobody this year, says Rod Alberts, of the Detroit Auto Dealers Association, which sponsors the show.

But the floor space on the lower level won't go begging because Chinese automakers want it.

You know it is funny, as I read this I think WOW, they are really trying to bring back their customers but it is interesting that this is the corporate goal but when you walk into a dealer as a current VW customer and looking for a good deal on another VW...they don't want to give you anything right off the bat. You still have to fight tooth and nail to get a good discount off of the retail price and also not having the "service perks" that some others get. For instance I just had to bring in my Rabbit for some warrenty work and VW will no longer give you a courtesy car to drive around in (I'm in Outside Sales so my car is my office...I have to be on the road or I get fired).
Brand new car with issues and VW won't pay for a car...not all warrenty work is 8 hours (overnight) long and there is no way I can spend more then an hour at a dealer out of my work day to get stuff fixed.

So in saying all of this you would think that Volkswagen would treat their current customers, especially the ones on their 3rd Volkswagen a little better and give them a few more perks so that we Volkwagen owners can spread the word to friends and family when others are in the market for a vehicle. Especially when there are so many serivce issues with Volkswagens that you would think that they would be even more generous in thier service to offset the fact that there are so many issues. I love Volkswagens and the history they have and I have been super loyal to them in hopes that sooner or later they will be come as reliable as a Toyota or Honda. It seems like they are just trying to look like a Japanees car ('06 Jetta vs. Corolla) rather then focusing on keep the well love VW design and just making them more reliable. If they don't want to foot the bill for courtesy cars then maybe they should make sure there cars are more reliable then.

Most of their techonology isn't the newest of all the German manufaturers as they do steal little bits of technology from Mercedes, Audi, BMW etc.. so the technology is there and already tested. Why it isn't as reliable as it should be, I can't figure that out. Unless VW is putting all of the "left over" technology that the other German manufactures use and don't like into the VW's?? Not to say Mercedes quality is any better as my friend used to work for Mercedes Head office in the warrenty department so I have heard stories their too.

I just really think that what VW Marketing wants and expects from the consumer doesn't equal what Vw is offering. They maybe need a more real world marketing focus group with previous owners to figure out their faults since it seems that they are blind to what is really going on....or they just don't want to fix the problem.