In order to boost the growth in China and ensure the proper integration of MAN and Scania, two truck brand of VW, the company modified its management board. Jochem Heizmann, Head, Commercial Vehicle Business, Volkswagen will now head the new management board position created by the company exclusively for China, its largest market. VW was the first overseas company to enter China 30 years ago and is planning to invest USD 17.3 billion by 2016 to set up plants in the country, with two local partners. To end the dominance of General Motors and Toyota and grab the top position, German company has acquired Scania, MAN, Porsche and Ducati.
Leif Ostling will take over the previous responsibilities of Heizmann on the board. Ostling is the Chief Executive Officer of the Scania which is Swedish truckmaker bought by the Volkswagen in the year 2008. It will be duty of Ostling to integrate Scania with MAN SE, another truck making company based in Germany, acquired by VW group in 2011. Ostling said, "It will be my task to take part in this development, to coach and make sure we reach results in this."
The new CEO of Scania, Martin Lundstedt feels that even if the company continues its present strategy targeting the high-margin premium end of the truck market, integrating with MAN will reduce the investment. He said, "There are a number of projects within purchasing and technology where we see opportunities to cooperate to strengthen positions." He added further, "The products are complex and lead times are fairly long, so we're looking at when is the right time to introduce new (innovations) for example."
According to Martin Winterkorn, Chief Executive Officer, VW, with successful integration of Scania and MAN SE, the former rivals, Volkswagen can generate extra revenue and profit worth nearly 200 million Euros.
Georg Pachta-Reyhofen, Chief Executive Officer, MAN was completely neglected in the mayhem of reshuffling the responsibilities. A manager at Scania, Anders Nielsen, gathered Reyhofen's routine responsibilities regarding the important European truck business.
Winterkorn said, "Our company has grown strongly and become more international in recent years. This fundamental reorganization is the right response to the increasing challenges."
With sales volume of 2.3 million vehicles in 2011 in China, the job of growing it further will be the responsibility of Heizmann who happens to be a manufacturing expert. In 2011, revenue generated by the two domestic joint ventures of the company accounted for more than 2.6 billion Euros. This figure was more than the cumulative operating profits generated by French car makers Renault and Peugeot Citroen across the globe.
Volkswagen's operation in the country has been spearheaded by Karl-Thomas Neumann till date, however, he is not on the management board of the company. Industry analysts feel that after the contract of current CEO, Winterkorn, ends in 2016, he is most likely to be succeeded by Neumann.
