Volkswagen CEO hints at major shake up

May 29, 2015, 1:20 PM UTC
Lamborghini President and CEO, Stephan Winkelmann, launches the new Lamborghini Urus at the Beijing Auto Show in Beijing, China, April 23, 2012.
Lamborghini President and CEO, Stephan Winkelmann, launches the new Lamborghini Urus at the Beijing Auto Show in Beijing, China, April 23, 2012.
Photograph by Jackson Lowen

You may have already read that Volkswagen AG plans to proceed with the manufacture of a new Lamborghini Urus SUV by 2018. For fans of exotic cars, that seemed to be the big news.

But lost in all of the hullabaloo was a far bigger story: a proposed restructuring of the No. 2 global automaker. VW’s chief executive officer, Martin Winterkorn, 67, has promised to deliver that, only weeks after a showdown with the company’s chairman, Ferdinand Piech. Piech, 78, a major VW (VLKPY) shareholder via a family trust that controls a majority of the shares, resigned from the automaker’s board on April 25.

According to the German magazine Automobilwoche, in a meeting earlier this month, Winterkorn told VW’s top executives that big changes are coming. “We are preparing the company for the coming 10, 20 years,” Winterkorn is quoted as saying in Automotive News, a sister publication of the German magazine. The meeting took place in Wolfsburg, Germany, with 4,000 other VW managers and executives watching on video. “It is time to further develop our management model and rearrange structures,” he said. “We must become faster, more efficient and more agile.”

As Piech’s protégé for at least two decades, Winterkorn supervised the execution of his boss’s strategic vision, which included the acquisition of brands such as Lamborghini, Bentley and Bugatti. By developing a few basic vehicle architectures, relying on common parts and creating similar models under different brands, VW has scrambled to the front ranks of the world’s top-selling automakers, nipping at the heels of No. 1 Toyota Motor Corp(TOYOF) .

With Piech out, will Winterkorn tweak the former’s ideas or advance a new vision of his own? Might a new vision from Winterkorn refine or alter the process for creating new vehicle models, the lifeblood of VW and every global automaker?

Perhaps he might conclude that niche brands like Lamborghini are a distraction. The Lamborghini Urus, which will sell in very low volume, only is feasible to manufacture because the model shares mechanical underpinning with other SUVs from VW: Porsche Cayenne, Audi Q7, VW Touareg SUVs and the Bentley Bentayga – an SUV model still under development.

Meantime, VW’s main brand – VW – is underperforming from a profit standpoint. In the U.S., VW is “punching far below its weight,” a phrase Winterkorn is said to have used in his speech to top management. Specifically, the automaker has lagged behind with the development of SUV and crossover models for American consumers. But earlier this year, the company said it will offer up to five new SUVs and crossovers to U.S. car buyers within the next few years.

Whether Urus connects with willing buyers three years from now is of little moment to VW’s future. The outcome of Winterkorn’s deliberations over the next couple of months, by contrast, may set a new course for the automaker.