VW looks to Asia with management shake-up

Volkswagen has announced a significant management shake-up that strengthens the importance of the carmaker’s fast-growing China subsidiary and accelerate a long-planned three-way integration of the group’s truckmaking businesses.

VW said it was carrying out a “comprehensive reorientation of its structure and personnel” after its supervisory board, headed by the carmaker’s most powerful figure, Ferdinand Piëc,h, met on Friday in Stuttgart.

People close to VW said the shake-up would signal a new international dimension to the management of a company sometimes criticised for its overly German approach.

VW said Jochem Heizmann would be responsible for China in the management board, replacing former CEO of parts-supplier Continental, Karl-Thomas Neumann, who has run the business since September 2010.

Leif Östling, chief executive of Swedish truck maker Scania , which is majority owned by VW, like German rival MAN, is set to join the management board to push steps to forge a trucks alliance between Scania, MAN and VW’s commercial-vehicle unit.

The changes in VW’s China operations come after VW had to offer an apology to Chinese customers and extend warranty periods in response to problems with gearboxes supplied on 1m vehicles.

China is VW’s biggest overseas market, and it is the country’s biggest carmaker by sales.

Mike Dunne, of Dunne and Co, an Asian auto consultancy, said: “Chinese consumers expect nothing but the highest quality from German products. The issue of faulty transmissions can only undermine VW’s brand image.”

Mr Neumann, a former chief executive at parts supplier Continental, was once seen as a possible successor to Martin Winterkorn, VW’s chief executive.

Klaus Paur, auto analyst at Ipsos in Shanghai, said: “The slowing growth in the passenger vehicle market was not favourable to Neumann’s term as VW chief in China and most recent transmission quality issues have exposed unexpected weaknesses.”

VW makes its own brand, Audi and Skoda vehicles in China through its joint ventures with local carmakers SAIC and FAW. VW earned an operating profit of €2.6bn and delivered 2.26m vehicles in China in 2011. It employs more than 48,000 people and has about 1,500 dealers there.