A Rocky Start for the New Boss
April 16, 2002
It seems even three years of grooming, two years of record results and one day of fanfare was not enough to prevent a rocky start for Volkswagen's new chairman.
Bernd Pischetsrieder (photo), a former BMW top executive, officially took over the reigns of Germany's largest auto concern on Tuesday, replacing highly successful VW chair Ferdinand Piech. On the same day, the new head had to announce orders had dropped 9 percent in the first three months of 2002.
The news is "everything but satisfactory," the new CEO told a shareholders meeting in Hamburg.
Particularly after VW annouced record sales figures last year, the last of Piech's nine-year reign. The "Rottweiler of the auto industry" as one newspaper dubbed him, righted a sinking ship after taking over in 1993.
Turning it around
Faced at the time with heavy losses, particularly in new acquisitions Seat and Skoda, Piech got rid of nine top executives and outsourced labor to Hungary, where VW daughter Audi's factory is, and the Czech Republic, the home of Skoda.
The moves kept the concern's labor costs among the lowest in its league and helped the company to record wins of 88.5 billion euro in 2001 and 91.4 billion euro in 2002.
The success will make Piech a hard act to follow, especially now that the worldwide downturn in the auto industry seems to finally be affecting Volkswagen.
Cutting costs, going luxury
Pischetsrieder, who joined the company in 1999, wants to save 1 million euro in purchases and production in order to at least maintain the record numbers for the coming year.
He will also have to build on recent ventures Piech made into the luxury market. All eyes are on the Phaeton (photo), the concern’s much-celebrated first luxury car. Volkswagen announced last week that there have already been 1,000 orders, six weeks before the car comes onto the market.
Pischetrieder will also have Bentley, Bugatti and Lamborghini – all Piech acquisitions – to harness in Volkswagen’s charge into the currently profitable luxury market.
But the new chief will have to act quickly to save sinking demand for traditional VW models lke the Golf and Passat. It was those models that brought so much success to his predecessor. Pischetsrieder will need them if he is to continue the trend.