Wolfgang Bernhard isn’t afraid to shake up things.
“I am quick and focused and I like to cut the formalities,” Bernhard told a VW employee newspaper last month.
The new head of the VW brand group said that diplomacy is not his strong point.
That’s OK with Bernhard’s boss.
VW group Chairman Bernd Pischetsrieder wants Bernhard to use his direct style to attack the VW brand group’s weaknesses, which include:
The delay gave Bernhard time to learn about the company. At the same time, employees had an opportunity to get to know him. And it also allowed VW to prepare for the controversy Bernhard is expected to cause as he shakes up VW, making it leaner and more agile.
Another reason why the new executive didn’t get more control sooner was caution. Only a year ago, Bernhard was fired just two days before he was supposed to take over DaimlerChrysler’s Mercedes Car Group.
He takes over control of the Volkswagen, Skoda, Bentley and Bugatti brands from Pischetsrieder, who can now focus on overall company strategy.
Like his counterpart Martin Winterkorn, head of the Audi brand group, Bernhard reports to the VW group chairman.
In the industry, Pischetsrieder is seen as a good strategist, while one of Bernhard’s strongest abilities is execution.
“In this sense, the two are a perfect fit,” said Jochen Siebert, vice president Europe of CSM Worldwide in Frankfurt.
Some of VW’s issues date back to Ferdinand Piëch’s reign as CEO. Piëch ruthlessly changed ways at Volkswagen when he became boss in 1993. Veteran employees remember his style as autocratic and hostile to dissent.
But Piëch also fostered technological advances, increased VW group’s No. 1 position in Europe, and achieved huge cost savings by slashing supplier payments and following a stringent platform strategy.
Much of the money he saved he spent in a shopping spree: Volkswagen bought Bentley and Bugatti and developed the Phaeton luxury sedan, complete with its own assembly plant in Dresden; Germany.
Piëch’s legacy is both positive and negative – a premium product image but high production costs; high unit sales but declining margins; global presence but slow reaction to changing markets.
Pischetsrieder has been CEO since 2002, but it has taken time for him to free himself from Piëch’s influence, especially since he reports to the supervisory board Piëch still chairs.
Bernhard’s arrival gives Pischetsrieder an ally in his effort to restructure VW and create a consistent brand strategy.
Bernhard earned a reputation as a turnaround specialist as the No. 2 in D/C’s Chrysler group. He cut jobs and costs and helped develop attractive new products such as the Chrysler 300 sedan. In his previous post as head of AMG, Mercedes’ performance division, he was known as a “car guy.”
But that hard-charging reputation worked against him when he was named to succeed Jürgen Hubbert as head of Mercedes. His brash statements about what was wrong at Mercedes before he took over irritated both Hubbert and the Mercedes labor unions, which feared tougher times under him. Bernhard’s departure from DaimlerChrysler was inglorious.
Pischetsrieder was determined to avoid that kind of resistance at VW. Bernhard certainly seems more subdued. He has avoided media interviews. VW turned down a request to interview him for this story. Until now, he has had no official duties as a board member and has toured VW facilities to learn the company.
But unofficially, Bernhard is already hard at work. He has identified VW’s main needs as lower costs and higher quality. He sees the product lineup and brand images as primary strengths.
“Bernhard does not seem to be particularly fond of Piëch’s super-premium strategy,” said CSM’s Siebert. “He is not as immersed in technology and he is thinking along more pragmatic lines.”
Behind the scenes, Bernhard has already put together task forces and held product meetings with up to 350 mid-level and senior employees.
“This type of meeting was previously unheard of,” an insider said. “Issues came on the table openly.”
The style of meetings was sharply different.
“Bernhard asked frank questions, but he also would pat shoulders and say ‘Well done’ if he liked an approach,” the source said.
Bernhard puts great emphasis on the problematic US market, which he learned as Chrysler’s chief operating officer.
“Bernhard has been firing up the troops in the critical US market, preparing them for the onslaught of changes and jump-starts he has planned,” said Peter De Lorenzo, who was a consultant to Bernhard and Chrysler CEO Dieter Zetsche.
But Volkswagen’s structure makes it hard to cut costs.
VW builds more components in-house than competitors who have outsourced many to suppliers with lower wages. Analysts and suppliers say VW’s bureaucratic and hierarchical management structure also slows progress.
“Instead of finding a solution together, there is a lot of blame-shifting if something goes wrong,” said a supplier executive who requested anonymity. He added that Volkswagen suffered from a lack of “project management skills.”
Time for change
In the VW employee newspaper, Bernhard argues for change.
“Everyone has to understand that he is not only responsible for his branch but for the entire company,” he wrote. “If anyone thinks he can merrily continue as usual, I can tell him right now it won’t work that way.”
Despite the tough talk, many within VW look forward to change under Bernhard.
“We feel a positive tension,” a company source said.
At the VW annual meeting April 21, Bernhard received an unusually cordial welcome from shareholders - a sharp contrast to the April 6 annual meeting at previous employer DaimlerChrysler, where executives faced hours of harsh criticism from shareholders.
“We are glad you came,” said Hansgeorg Martius of Schutzgemeinschaft der Kapitalanleger, a shareholder association.
Ulrich Hocker of Deutsche Schutzvereinigung für Wertpapierbesitz, a similar organization, told Bernhard: “Our hopes are on you.”