VW will split into ‘sporty’ and ‘classic’ units

WOLFSBURG, Germany — Volkswagen Group will split itself into two car divisions this month and appoint two executives to run the multibrand units, according to company sources familiar with the plan.

At its Nov. 23 meeting, the VW supervisory board will form a “sporty” or “southern” division consisting of the Audi, Lamborghini and Seat brands, and a “classic” or “northern” brands unit that will include Volks-wagen, Skoda and Bentley, the sources said.

A third unit will be created later for VW’s light commercial vehicles and for expansion in the heavy-truck business.

The reorganization has been signaled in various remarks by VW Chairman-designate Bernd Pischetsrieder, who will succeed Ferdinand Piech as CEO in April.

“It’s an interesting concept,” said Len Hunt, vice president of Audi of America Inc., in Auburn Hills, Mich.

“There’s been a lot of talk about this split proposal — the grouping of the brands into sporty and classic. Obviously quite a few members of that board will have an interest in such realignment. Dr. Piech has had kind of an inkling toward it.”

No impact on North America

Pischetsrieder said so himself in a few interviews, Hunt said. But a reorganization probably will not have any major impact on Audi and Volkswagen operations in the North America, Hunt said.

“That’s at the group’s highest levels and it really doesn’t affect the States,” he said. “Two brands — Seat and Skoda — are not even sold here.”

Auburn Hills is the headquarters for the Audi and Volkswagen brands in North America. Jens Neumann is the Volkswagen AG board of management member in charge of strategy for the North American region.

Contenders for the job as head of the Audi, Lamborghini and Seat group are Martin Winterkorn, board member for product development, and Herbert Demel, president of Volkswagen do Brasil and a former chairman of Audi, the sources said.

According to another scenario said to be under consideration, Demel would run the southern group, and Winterkorn and Audi Chairman Franz-Josef Paefgen would swap jobs.

But many insiders expect Paefgen to leave VW, and one source said he will take a post at the renowned Aachen Technical University in Germany.

Pischetsrieder is expected to bring in Seat marketing director Jorn Hinrichs to lead VW marketing. Seat CFO Lars-Henner Santelmann is expected to replace Bruno Adelt as VW group CFO.

Meanwhile, Volkswagen’s labor representatives say they want the company to stop spending so much to develop luxury cars.

“We are not convinced that the planned model range will be successful and will pay off against the huge investments,” said Bernd Sudholt, vice chairman of the VW Works Council. “VW should better invest in refurbishing our traditional volume production plants instead.”

Sudholt said the council asked the company last week to reconsider the investment in the luxury program.

VW has set aside more than $3 billion to develop luxury models for Bentley and Bugatti, and for the D1 sedan and W12 super sports car for the Volkswagen brand. Winterkorn acknowledged recently that the original $3 billion investment program had been increased to upgrade the D1.

“These programs always cost more than you expect,” said John Wormald, analyst for the Autopolis research group.

“But return on investment is low, so it would indeed be better to reinvest in VW’s traditional plants.”

Automotive News Staff Reporter Ralph Kisiel in Detroit contributed to this report

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