Winterkorn survives, with a concussion

Winterkorn in Beijing - Picture courtesy Bertel Schmitt

When Volkswagen Chairman Ferdinand Piech made one of his usual tight-lipped remarks last week, and said that he is “at a distance” to VW CEO Martin Winterkorn, the media already made lists of possible successors. The 78-year-old Piech seems to lose his touch. He forgot to count the votes before throwing daggers. Hours after the remark, most of the supervisory board rallied behind Winterkorn. Today, the board’s Executive Committee said that “Winterkorn is the best possible” CEO, and that the committee will now propose to extend Winterkorn’s contract beyond 2016. Translation of “best possible:”

Piech failed to present a suitable successor. If Piech would have pulled a superstar out of the cylinder, the board would have caved. Keeping Winterkorn is a defeat for Piech. Piech is a vindictive loser. More tiffs between the erstwhile rope team are pre-programmed. Piech could wait until Winterkorn trips. Or he could retire, and take his sailboat and Ursula on round-the-world cruise.

On the same day as the executive committee rendered its decision to keep Winterkorn in absence of more suitable suitors, Volkswagen reported its group numbers for the first quarter of the year. The reason for a near nuclear Winterkorn is in those numbers.

Volkswagen Group March 2015
Brand Mar’15 Mar’14 YoY Jan-Mar 15 Jan-Mar 14 YoY
Volkswagen Passenger Cars 558,600 563,600 -0.9% 1,480,000 1,500,000 -1.3%
Audi 177,950 170,355 4.5% 438,200 412,800 6.1%
Porsche 20,222 15,378 31.5% 51,100 38,700 32.2%
ŠKODA 102,100 96,100 6.2% 265,100 247,200 7.2%
SEAT 49,000 41,400 18.4% 102,700 93,400 10.0%
Volkswagen Commercial 45,450 41,581 9.3% 108,200 103,200 4.8%
MAN 11,500 13,600 -15.4% 22,100 26,400 -16.4%
Scania 7,500 8,200 -8.5% 17,500 18,800 -7.1%
Total 968,300 946,900 2.3% 2,490,000 2,440,000 1.8%
Total 968,300 946,900 2.3% 2,490,000 2,440,000 1.8%
Monthly data: Calculated. March data for SEAT, MAN, Scania etstimete, no
data. Source: Volkswagen

Volkswagen’s formerly stellar growth has slowed down to just 1.9 percent in the first quarter, and it is now in the same ballpark as Toyota and GM. Volkswagen’s namesake volume brand is down 1.3 percent in Q1. What little growth there is goes on account of Audi, and the former stepchildren at Skoda and Seat. On May 8th, Toyota will announce record profit numbers, created with clever belt-tightening, and by developing smart and lean production methods. At Volkswagen, profits are under pressure.

When Piech started as VW CEO in 1992, the self-confessed Japan-fan wanted to implement the Toyota Way at VW. The plan faltered in the cliffs of Volkswagen’s middle-management that sabotaged “that Japanese bullshit” wherever it could. There were plans for an “atmende Fabrik,” a breathing factory that adapts to the ebbs and flows of demand. That concept soon was on its last gasps. Piech’s admired adversary Toyota quietly developed a real breathing factory. It wasn’t a secret. If you knew where to look, you saw it coming four years ago.

PS: A note on the numbers: Volkswagen’s formerly dependable numbers departments also  isn’t what it used to be. There were no group numbers published in February. Volkswagen reports year-to-date numbers only, monthly data can be derived by simple arithmetic.  With some February numbers missing, a few minor assumptions had to be made.