News - Volkswagen
Volkswagen eats cannibals
The Volkswagen Group plans a reduction in competing brands
13 Feb 2002
By BRUCE NEWTON in SINGAPORE
THE Volkswagen Group is reversing its model proliferation course, planning a long-term reduction of competition between its brands to avoid them cannibalising each other.
The dramatic change comes in the wake of Volkswagen's decision to split its seven car companies into classical and sporting divisions.
The new policy was confirmed by Volkswagen AG management board member Dr Robert Buchelhofer last week.
Speaking at the annual group Asia-Pacific press conference in Singapore, Dr Buchelhofer described the reorganisation of Volkswagen, Skoda and Bentley into a classic group, and Audi, Seat and Lamborghini into a sporting group as "a quite natural move".
He said this reorganisation would lead to the reduction of inter-brand competition, although the number of segments the group covers would increase.
"It's a kind of unbundling process," he said.
"Ideally, every segment should be taken care of by one brand, given the segment is big enough it could carry two or three brands.
"Take for instance the segment of small roadsters, if we detect there is a potential around the world for small roadsters, the next question would be 'okay, if this is so, which brand takes care of this segment full stop'." Dr Buchelhofer said the long-term plan was for brands to move out of some segments and into others.
"In terms of numbers, in Europe we are now covering 75 per cent of all market segments, we are looking at 85 per cent in the next years, so we are going to move into more segments and niches." The change in policy is a strong signal that chief executive officer-elect, Bernd Pischets-rieder, is already effectively in control of future policy at the automotive giant, despite not officially taking over from Ferdinand Piech until April 17.
It had been widely expected that Dr Pischetsrieder would act to curb the engineering diversification of Volkswagen AG, which has not only released models from its various brands that compete directly against each other, but also cars from within the same brand that cross-over - the Golf and Bora estates being examples.
He is also expected to cutback on the multiplicity of engine and transmission choices - the Golf, for instance, can be purchased in Germany in any one of 16 combinations.
While the surge of models led to a leap in worldwide market share for the group, it came at the protest of dealers who had to sell the sometimes almost identical models, and with little enthusiasm from the markets.
"We reach a point in time that we have to reshape and reorganise ourselves in a way that every single brand identity must be reshaped and focussed again," Dr Buchelhofer said.
"Otherwise we are running into the risk of real cannibalisation within the brands." "I would like to stress this (cannibalisation) hasn't happened yet, with no more than two per cent of our customers travelling between the brands, but there is no need to wait." Dr Buchelhofer said it was the success of Skoda and Seat that had forced VW to restructure.
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