VW overhauls management to expand in China

Sat Jun 2, 2012 4:08pm EDT
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By Irene Preisinger and Christiaan Hetzner

STUTTGART/BERLIN (Reuters) - Volkswagen (VOWG_p.DE: Quote) elevated China's status within its sprawling empire and reasserted control over its wayward trucks brands with an extensive overhaul of senior management on Saturday as it bids for global market dominance.

The company created a management board position dedicated solely to China - it's single largest market - which will be filled by Jochem Heizmann, who has been heading up the group's commercial vehicles businesses.

Volkswagen was the first overseas carmaker to enter China three decades ago, and with its two local partners is investing 14 billion euros ($17.3 billion) up to 2016 to build factories around the country.

It has been scooping up brands like Scania SCVb.ST, MAN (MANG.DE: Quote), Porsche (PSHG_p.DE: Quote) and Ducati in recent years as part of an effort to overtake General Motors (GM.N: Quote) and Toyota (7203.T: Quote) at the top of the industry by 2018.

"Our company has grown strongly and become more international in recent years. This fundamental reorganization is the right response to the increasing challenges," Volkswagen Chief Executive Martin Winterkorn told reporters at a news conference in Stuttgart.

Officials say the restructuring is necessary to better control the company's remarkable growth. Since grabbing the reins in January 2007, Winterkorn has transformed Volkswagen from a company selling 5.7 million vehicles a year to nearly 8.4 million.

"They're admitting that China is so unique a market that they can't manage it together with the other businesses - it's not a different country, it's a different planet. You need to treat China independently from the rest and not tether it to the mothership," said industry analyst Christoph Stuermer from IHS Automotive.

Heizmann, a manufacturing expert, will have the job of expanding Volkswagen's business in China, where the group sold 2.3 million vehicles last year.   Continued...

A Volkswagen logo is pictured during the second media day of the 81st Geneva Motor Show at the Palexpo in Geneva March 2, 2011. REUTERS/Denis Balibouse