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AudiWatch Update (Tm) #13
AudiWatch Update #13, 4-12-93
Recent management changes at VW here and abroad, as well as the
dispute with GM over the hiring of Inaki Lopez, send a clear
signal that it's not business as usual.
The driving force behind these changes clearly is VW chairman
Ferdinand Piech, who has just been in the job just over 3 mos.
He has taken the opposite tack of his predecessor, Carl Hahn,
who in his final days found himself preoccupied with unification
and the establishment of new plants in eastern Germany
Though VW, like GM in America, is leading in Euro sales, it is
loosing tremendous amounts of money. Last week, Piech said VW's
$776-million first-quarter 1993 loss put the company in an
"emergency situation" and outlined a "crisis" restructuring program.
Those losses, particulaly in NA, means radical surgery in the
form of hiring a cost-cutter such as Lopez and the resignations
of two key executives, Hans Hungerland (who was in charge of the
VW brand worldwide outside of Germany) and VW of America pres.
William Young. Both men, who are adherents to customer-driven
marketing, were unable to turn things around for VW in the states.
Last year VW sold about 70,000 cars here (USA, Ed.), down from
90,000 the year before. The peak came in '70 when 569,000
(including 400,000 Beetles) were sold.
Their departure is merely the latest salvo in what has been an
ongoing corporate restructuring that Piech began when he took
over on Jan. 1.
John Kerr, president of VW's N.A. Ops, will replace Young.
Detlef Wittig, VW AG's export sales chief, will replace Hungerland.
Management shakeups and "crisis" restructuring when times are
tough are nothing new--the last 10 mos. at GM prove that. But the
difference here is that VW doesn't have resources like GM's.
"VW is extended financially thanks to these moves into buying
Seat (in Spain) and Skoda (in the Czech Rep.) and (VW's) cost
structure in Germany," an analyst said. VW also doesn't have
profitable arms like a Hughes Aircraft or several component
operations that GM could sell if necessary.
"When you only sell 70,000 cars you have to make a decision,"
a VW source said. "You either have to do something to make that
70,000 go back to 150,000, or you have to decide if it's worth
your while to be here. (USA, Ed.)"
Piech decided it is worth his while. And VW watchers say he
attributes much of the hemorrhaging to the fact that VW's
Mexican man. op. is STILL (emphasis theirs, Ed.) not up to speed
in quality nor efficiency.
Solutions? Earlier this month, Juan Manuel Rodriguez Jado was
named the new pres. controlling VW's Mex. ops. His mission is to
get the plant running smoothly and make sure US-bound Golfs and
Jettas are up to snuff. US dealers have been bellowing for
up-to-date products, to the point that VW gave them cash payments
to mollify them until the new cars arrive this summer.
And certainly the restructuring includes hiring Lopez away from
GM and aggressively recruiting his former warriors. VW has been
so aggressive, in fact, that the General went to a Frankfurt
court and won an injunction to prevent VW from hiring some
Opel engineers at twice their pay.
Piech said other highlights of the restructuring include
going to lean manuf, reducing overhead, investment and labor
costs, and cutting purchasing prices and the number of parts
used to build a car.
Where will it all end? The buzz is that once the dust settles,
further links with Ford will take place, beyond their current
joint-venture minivan for Europe.
"It's logical for them to do more projects together beyond
the minivan they're already working on," an analyst said.
"VW could use Ford, but I don't know what Ford gets out of it,
unless it's help in another part of the world, like China
or eastern Europe."
AUDIs of interest FOR SALE:
AUDI Ur QUATTRO, 1983, 43k miles, black/black leather,
Euro lights, excellent condition, call Ken at 508-425-4319. MA
AUDI Ur QUATTRO, 1982 World Champion AUDI Quattro
Rally Car, Michelle Mouton/John Buffum, Pikes Peak Class
Winner, $70,000. Contact Chris 203-775-7834/d 203-354-8652/e. CT
AUDI Ur Quattro, 1983, Zermat Slvr/Choc. New SR. 37K mi, $16K
Your way-behind, one-handed editor,
-glen, Vorsprung durch Technik!