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Volkswagen to give greater autonomy to brands and regions

The bosses of Volkswagen’s diverse group of brands, as well as regional managers, will be given more power by head office in an effort to address underperformance by the company in certain key markets.

Volkswagen has designs on becoming the world’s number one automotive group by 2018, but that’s being put in jeopardy by declining sales in two key markets, the USA and Brazil.

In the USA, sales of Volkswagen-branded vehicles are down 11 per cent or around 40,000 units compared to this time last year. In August, the Wall Street Journal reported that VW sales in Brazil were down roughly 17 per cent to 320,300 in the 12 months to July 2014.

Drops in the rest of South America (down 22 per cent) and Russia (down 10 per cent) have been offset by strong growth in Western Europe and Asia. In the year to July, sales in China jumped 17 per cent to 2.1 million, German deliveries rose almost seven per cent to 724,300, and sales in the rest of Western Europe expanded over eight per cent to 1.2 million cars.

Despite the ups and downs, Volkswagen expects sell over 10 million vehicles for 2014 calendar year.

Anonymous sources have told Reuters that the problem lies with over-centralisation at the group’s headquarters in Wolfsburg.

Bernd Osterloh, chairman of Volkswagen’s Works Council, told the news agency: “I think a company of this size cannot steer everything from Wolfsburg. Our approach is: centralise as much as necessary and decentralise as much as possible.”

To that end, Volkswagen is in the process of starting up a planning centre and hiring 200 engineers for the US market. Similar moves were rumoured earlier this year for Volkswagen’s Brazilian arm.

Published: Friday, December 5, 2014

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