Winterkorn to Create an Audi Out of Volkswagen

From the very first day that Martin Winterkorn became the new Chief Executive of Volkswagen AG he has made it clear that he means business. And just last month, he has ordered the scrapping of the scheduled preview of the new Passat in Germany’s capital not because of mechanical problem, electrical problem not even parts problem say defective VW ball joints but for the reason that he was not satisfied with the look and feel of the Passat. Winterkorn said, “I don’t like to present car before it’s finished. That’s why I canceled the Berlin showing.”

For those who are not familiar with Winterkorn, he is the former Chief of Volkswagen’s luxury unit, Audi. And tomorrow at the company’s annual press conference, Winterkorn will finally discuss his plans for the Volkswagen brand.

The Volkswagen brand was primarily the reason why Winterkorn was placed as the new CEO of VW. It should be noted that Winterkorn was the man responsible for the remarkable turnaround of Audi and VW top brass feels that Winterkorn can do the same magic on the VW brand which has been losing hundreds of millions of euros at its German factories since 2005.

When Winterkorn assumes the CEO position in VW he also brought with him his entourage of loyal subjects from Audi which he rationalize by saying that his Audi design team can get the job done quickly.

According to Peter Braendle fund manager at Zurich-based Swisscanto Asset Management, which oversees the equivalent of $46 billion including Volkswagen stock, “All of the Audi cars have a more trendy and modern design than Volkswagen. This Audi design team is strong. If they can do the same successful job at Volkswagen as with the Audi, then it will be marvelous.”

And tomorrow at the company’s annual press conference Volkswagen will report its detailed financial figures. Europe’s largest has reported last month that its 2006 net income has doubled to 2.75 billion euros or $3.61 billion USD due to the following: launching of new car models such as Audi’s Q7 sport-utility vehicle, disposal of a vehicle-rental division and a tax gain. The Audi unit was accounted for about half of the group profit earned by the Wolfsburg, Germany-based Volkswagen.

Shares of Volkswagen in Frankfurt increase by 3.60 euros or 3.7 percent to 100 euros which is considered to be the highest price obtained since July 8, 1998. VW’s stock has gained 16 percent for this year which is the third-best performance on Germany’s benchmark DAX Index.

The Passat Scrapped for Good?
Before the takeover of Winterkorn the Passat is a project headed by Wolfgang Bernhard, former CEO of VW who resigned last January due to the management shake-up that is happening inside Volkswagen.

The Bernhard Passat is the very same model that was suppose to debut at Berlin but unfortunately was stopped by Winterkorn. The Passat project is not totally abolished it’s just that the new VW CEO’s team from Audi which includes Walter de Silva has focused more on the next generation of Golf hatchback, Volkswagen’s best-selling vehicle. The new Golf is scheduled to come out next year which doesn’t leave much time for changes.

“The first priority is the Golf, the Golf successor, because that’s the most important vehicle of the brand. That’s the vehicle that has all of our attention,” said Ulrich Hackenberg, the former Audi development chief and at present the head of Volkswagen engineering at an interview in Geneva.

Hackenberg first week at Volkswagen he ordered outright changes especially in cutting the size of the rubber window seals in half to reduce weight and cost while giving the car a more refined look. According to Hackenberg, the Golf looks is “Very Rough”. “It looked very rough and not elegant and precise. This was something which could destroy the quality feeing, or the quality characteristics, of the car.” The changes that will takes place will incorporate the Audi touch to the Volkswagen models and the Golf is the going to be first product of the said change.

It is expected that with VW under the leadership of Winterkorn it is expected that quality is going to be the primary priority. And it will cover all products of Volkswagen including its array of auto parts such as the VW ball joint and many more.