VW shifts gears to 'qualitative growth,' not huge sales numbers

As we explained in our first drive of the refreshed Volkswagen Passat earlier this week, the German automaker's goal of becoming the world's largest automaker was not a good idea. And now, with the company in the midst of a damning diesel emissions scandal that almost seems like it could be blamed in part on this single-minded desire to grow, the company is abandoning its quest to be the world's biggest manufacturer.

Calling for "qualitative growth," CEO Matthias Mueller (shown above) announced a five-point plan to address the company's diesel emissions scandal while realigning its focus for the future. The announcement precedes the unveiling of Global Strategy 2025, which will be announced in mid-2016.

"Our customers are at the core of everything that our 600,000 employees worldwide do," Mueller said in the attached release. The company's first point will be to focus on taking care of those consumers affected by the diesel recall. Step two, meanwhile, focuses on the investigation into the catastrophe.

"We must uncover the truth and learn from it," Mueller said. As for steps three, four, and five, they focus on a new, leaner Volkswagen.

The company will push for management to be "decentralized," which will give greater independence to both the company's brands and the regions they operate in. The company will also look at its 300-vehicle global portfolio and "examine the contribution that each one makes to our earnings."

Step four is typical of companies going through public crises, and it's something we've heard in both the GM ignition switch recall and the Toyota unintended acceleration fiasco. Mueller called for this new Volkswagen to foster "a culture of openness and cooperation," without losing the company's "pursuit of perfection."

Step five, of course, is perhaps the most intriguing. It calls for the evolution of the company's controversial Group Strategy 2018, which sought global sales of over 10 million units. While Mueller opened his focus on this by saying people both within the company and outside of it "did not understand that our Strategy 2018 is about much more than production numbers," he then goes on to back away from world-leading production figures. Mueller dismissed the idea that his company must "sell 100,000 more or fewer vehicles than a major competitor."

Look for more on Group Strategy 2025 and what it means for VW in the coming months.
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Support for customers top priority
Volkswagen looks beyond current crisis
New strategy to be unveiled in 2016

Wolfsburg, October 28, 2015 – Matthias Müller, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, has announced the five key steps to realign the Group. "We have to look beyond the current situation and create the conditions for Volkswagen's successful further development," said Müller in Wolfsburg on Wednesday. He presented a five point plan that he intends to use so that Volkswagen remains one of the world's leading automobile manufacturers in the future. Müller is confident that "Volkswagen will emerge from the current situation stronger than before". He announced that the cornerstones of the Group's Strategy 2025 will be presented next year.

The Volkswagen CEO explained that his top priority is to support the customers affected by the diesel issue. "Our customers are at the core of everything that our 600,000 employees worldwide do," he said. According to Müller, Volkswagen is working intensively to develop effective technical solutions. In contact with the Kraftfahrtbundesamt (KBA – German Federal Motor Transport Authority) the implementation is set to begin in January 2016.

Müller's second priority is to systematically drive forward and complete the investigation into what happened. "We must uncover the truth and learn from it", he said, adding that Volkswagen is being extremely thorough in its analysis. For this purpose,audit firm Deloitte has been engaged in addition to the steps already announced. According to Müller, those responsible for what has happened must face severe consequences.

Müller's third priority is to introduce new structures in the Volkswagen Group. "The key point is that Group management will be decentralised to a greater extent in the future," he said, with more independence for the brands and regions. Müller stated that the Board of Management will focus on addressing cross-brand strategies, leveraging synergies and ensuring that Group resources are used effectively. "We will review in detail our current portfolio of more than 300 models and examine the contribution that each one makes to our earnings."

As his fourth priority, Müller is driving forward a realignment of the Group's culture and management behavior. He noted that the pursuit of perfection, the employees' commitment and social responsibility in the Volkswagen Group must be retained. However, he believes that changes are necessary in how Volkswagen communicates and how it handles its mistakes. "We need a culture of openness and cooperation." Müller also called on everybody at Volkswagen to display more courage, greater creativity and a more entrepreneurial spirit in their dealings with one another.

The Volkswagen CEO announced that the fifth priority will be to transform the Group's Strategy 2018 into a Strategy 2025. "Many people outside of Volkswagen, but also some of us, did not understand that our Strategy 2018 is about much more than production numbers. A lot of things were subordinated to the desire to be "Faster, Higher, Larger", especially return on sales." According to Müller, the point is not to sell 100,000 more or fewer vehicles than a major competitor. Instead, the real issue is qualitative growth. Müller announced that the cornerstones of the Group's Strategy 2025 will be developed over the coming months, and that it would be unveiled mid-way through next year.

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