Big Changes Ahead for VW

November 26, 2001

Sacramento - As the reign of Ferdinand Piech as chairman of Europe's largest automaker begins to wind down, it's becoming more and more apparent what direction the new Chairman, Bernd Pischetsrieder, will take when he takes the helm next April.

The former BMW boss, who was sacked for making an embarrassing and costly investment in Rover, is expected to take a more acute interest in the financial side of VW than he did at BMW.

Pischetsrieder is a proven product marketing genius and is to be given credit for the immense success BMW is experiencing right now. There is evidence this genius will be applied to VW vehicles and it's likely to come very quickly. As we told you last week, VW will split the company into two distinctive automotive brands. Many have stated that the move is a defensive one to make it more difficult to takeover the company, but it is more likely a sign of Pischetsrieder marketing strategy. At BMW he created a market strategy that used a modestly-priced car to capture the young car buyer and then provided that customer with larger and more expensive products aimed at keeping the customer in the BMW family as career and personal wealth increased.

Pischetsrieder will use Audi to develop a sports car group that will consist of Audi, Lamborghini and Seat. The VW Classic group will consist of Bentley, Bugatti, Skoda and VW.

There is also strong evidence that he will not ignore the needs of stockholders. He learned at BMW that it's important to maintain a relationship with them. This is believed to be why he has been a proponent of cutting VW's operating budget, and he succeeded last Friday in getting the board to approve a five-year capital budget that was nearly one billion dollars less than the budget approved last year. While details of that budget were not released there is speculation that in altering the budget, Pischetsrieder also grabbed more funds for product development.