Volkswagen News: Is it Jetta Launch or Jettison Plans?

June 22, 2010

Volkswagen parties in Times Square for the launch of the 2011 Jetta. But is this the biggest story around for the German giant?

Volkswagen went in for a sexy launch of the new Jetta in Times Square this week [June 2010]. The Square was turned into a beer garden for the event, with grass and sand shipped in. I’ve never seen sand as a big feature in beer gardens in Germany, and the music did not quite capture the Oompa Oompa Gemutlichgeit spirit either.

VW chose to launch the car using pop diva Katy Perry. Dressed in a skin-tight, low-cut dress and high heels that kept the cameras clicking, Perry took the stage while three new Jettas — one behind a makeshift moat — remained off on the margins. Perry’s presence might leave some to think the target market for the new Jetta is 14-year-old screaming girls. They certainly packed the square along with twenty- and thirtysomethings who danced and sang along. But Perry was there to generate the party vibe New Yorkers expected and to cast this new Jetta in an urbane, fun and distinctly American light.

American or what?

The attack on the American auto market by incomers has intensified with the shift in public interest away from the older and larger models which once dominated the sector. Toyota, Holda, and Volkswagen are serious players. VW seems inclined to differentiate itself from the Toyota strategy of appearing to make all-American cars for the US market. The brand image on offer in Times Square may be sending mixed messages. In any event, in light of Toyota’s recent problems they may also be signalling ‘we aren’t like those other foreign auto-companies like Toyota’.


Another VW story

But is there another VW story bubbling along? Maybe there is. Far from the glitz of Times Square, rumors are growing that Volkswagen is up to something big with Suzuki. Bikers have been blogging the possibility of something very new on two not four wheels. http://www.automotorblog.com/rumors-from-volkswagen/ . For this community, the story is as sexy as Katy Perry.

According to Dr Thomas Kirchmaier, a distinguished media commentator with long experience of the automotive industry, and Lecturer in Strategy at Manchester Business School “The VW Group is going partiularly strongly in China’

Rumors involves plans for the company to set up a new manufacturing plant in Asia http://www.businessweek.com/news/2010-06-16/volkswagen-plans-significantly-higher-operating-profit-sales.html, and that it its interest in electric cars may be an ‘e-lusion’ and that commitment to all-electric vehicles may be jettisoned.

Or there may be further developments in the dynastic struggle involving the inter-related Porsch and Volkswagen famiies. Leaders we deserve had been noting the possibility of a merger since 2007. The ‘reverse takeover’ occured shortly after State Law was revised, arguably to permit it.

Dr Ferdinand Porsche designed the original Beetle in 1936, and his grandson, Ferdinand Piech, is chairman of VW and the controlling shareholder in Porsche. Wendelin Wiedeking, chief executive of Porsche, is a member of the supervisory board of Volkswagen …In November 2007, rumours suggested that Porsche intended to acquire VW, and incorporate the models under the Porsche brand through a holding company. The powerful unions at Volkswagen sent a signal of discontent, with work stoppages, including 40,000 workers at the main Wolfsburg plant [Wednesday Oct 30th. 2007]

Business Lessons

There are plenty of business lessons here worth reflcting on. They will appeal to corporate strategists, environmentalists, business leaders, marketing executives, petrol heads, and (I almost forgot), teenage fans of Katy Perry.

Acknowledgements

Image of Katy Perry via starpulse


Is there a Watergate Scandal Emerging at Volkswagen?

February 25, 2008

watergate.jpg

Watergate is shorthand for a gradual but remorseless process through which a powerful leader becomes destroyed. Are there parallels in the current scandals at Volkswagen which have resulted in imprisonment for several middle-ranking executives? Will the very top leadership in Germany eventually be brought down?

Earlier this week [February 2008] Klaus Volkert, the former head of Volkswagen’s employee council, was jailed for his role in a corruption scandal.

According to The BBC, Volkert

was found guilty of incitement to breach of trust in the case, which involved employee representatives getting illegal privileges.

We have commented over the last year of the leadership troubles that have been hitting the corporate reputation of Europe’s premier car manufacturer.

I picked up the scent of something of interest, because of a little surge of numbers of visitors to this site searching for news about the VW company. That’s when I came across a Reuters report

Volkswagen supervisory board member Guenter Lenz has resigned his seat, becoming the latest casualty of a scandal involving the use of corporate funds to bribe the carmaker’s senior labour leaders. According to a statement from the Hanover works council, Lenz told employees on Tuesday at a plant staff meeting that he would now resign his board seat and his post as the site’s works council boss after previously ceasing to actively execute his duties. The public prosecutor’s office in Brunswick accuses him of aiding and abetting fraud and partaking in parties with prostitutes paid for out of a VW slush fund. Lenz, who has also resigned from the Lower Saxony state parliament, would accept a court sentence for his wrongdoing, the Hanover works council said.

The scandal has already cost the jobs of VW management board member Peter Hartz, group works council chief Klaus Volkert, as well as a member of the German federal parliament.

An earlier post [updated in October 2007] looked at the history of leadership problems at VW, concluding that
… the financial markets have absorbed the uncertainties regarding VW’s less secure future when and if the Volkswagen protection laws are removed. They are also unshaken by the leadership scandals, and by the risk that VW is falling behind Toyota in the development of its hybrid car range. (Strictly speaking, that is a wider concern for the future success of the German premium automobile marques, VW’s Audi, but even more so, BMW and Mercedes). At least Martin Winterkorn seems to be enjoying a leadership honeymoon.

Martin Winterkorn appears to have been parachuted in as someone untained with earlier scandals.

Back to Watergate

President Nixon’s downfall is now a classic of modern cultural mythology. The great leader is brought low, despite all efforts he made to protect himself.

At first, only the minor players in the drama are attacked. But as each each in turn is weakened, it becomes easier for a more important figure to come under attack. The drama is sustained with the prospect of defeat for the most powerful figure of all.

Forward to Volkswagen

Are we witnessing at Volkswagen a story that is gradually working its way towards the very highest of executives associated with the scandal?

I can only observe that denials are being made. The denials may be a necessary strategy to protect individuals from the hints that are emerging in the press.

Until something more substantial emerges, I shall not be naming names.

Acknowledgement:

Image of Watergate was downloaded from Professor Olsen’s fascinating history site