FRANKFURT - Volkswagen Group's new CEO, Bernd Pischetsrieder, inherits record earnings and some thorny problems.
To begin with, he has to repair a small-car strategy that isn't working.
In his final year as management board chairman, Ferdinand Piech delivered a profit of 2.9 billion euros, or about $2.6 billion at current exchange rates, on record revenue of $79 billion.
But the 54-year-old Pischetsrieder faces a sales slump. And he must move quickly to coordinate the two car divisions that he and Piech formed last year.
VW Group's sales in Europe declined 9.5 percent to 676,259 units in the first quarter, compared with a 4 percent drop for the Western European market as a whole. The VW brand was down 13.5 percent, to 379,269 units. The group lost a full percentage point of market share in the quarter, to 17.4 percent.
Meanwhile, sales at rivals PSA/Peugeot-Citroen SA and Renault SA increased by 4.3 percent and 2.8 percent respectively in the first quarter.
Pischetsrieder has other problems, too. VW is struggling to develop brand strategies for its two new divisions - VW/Skoda/Bentley and Seat/Audi/Lamborghini. The key issue is how to synchronize model and image strategies.
Analysts say the company needs to better define the roles of Volkswagen and Skoda, since almost all their models overlap.
Analysts expect VW group sales to drop below 5 million this year, and remain stable in 2003. Worldwide sales slipped to 5,107,142 in 2001 from 5,165,046 in 2000.