The Volkswagen Group board has backed the electrification reforms of CEO Herbert Diess, settling a potential boardroom bust up at Europe’s largest car maker. The announcement also confirms that both Lamborghini and Ducati will remain within the Group; both brands had been at risk of being sold off.
There is no word on the fate of Bugatti, which has been linked to a potential sale to electric hypercar manufacturer Rimac.
Further restructuring means that Bentley will, from 1st March 2021, sit under Audi. The British manufacturer is in the process of switching to electrification and Audi’s Project Artemis is a key aspect of this.
Prior to the board’s announcement, Diess had effectively forced a vote of confidence in himself in order to extend his contract beyond 2023 and push through the Together 2025+ strategy. Although there was no announcement as to Diess’s contract, VW did concede some key points to Diess such as confirming Dr Arno Arlitz as the new chief financial officer. Diess was keen to get Arlitz into position, replacing the previous CFO Frank Witter.
In addition, the Board “unanimously resolved to give its full support to the strategy [of Together 2025+] in particular the orientation of the company towards electromobility and digitalisation,” according to a statement from VW.
A round of cost cutting is also part of the measures announced, with material costs being reduced by seven per cent over the next two years. The separation of the procurement and component departments is confirmed, while VW’s HQ at Wolfsburg will become the electric factory hub for Volkswagen.
As a result, VW’s flagship electric car will be built at the headquarters in Wolfsburg. There is no word in the announcement as to what sort of car that could be, but development and production will be similar to the principles of Audi’s Artemis Project, in the hope of increasing efficiencies during the R&D stages.
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VW board tensions escalate as CEO forces vote of confidence
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7 percent cost reduction in 2 years.
As someone who has spent his career in automotive component purchase for vehicle manufacturers it always amazes me that senior management expect that significant savings can continually be magically pulled out of a hat without affecting quality or supply chain flexibility.
The typically Japanese approach of year on year cost savings is often just a fiddle of front loading prices and keeping fingers crossed that vehicle ranges go out of production when originally forecast.
The only sensible and practical way to reduce cost is to work closely with engineers and design it out in the first place.