VW reshuffle reflects China market's power

New board and CEO for operations in the country

In a move that shows China's increasing importance in Volkswagen's global strategy, the auto giant recently announced it will establish a new management board for its operations in the country.

According to the announcement, Jochem Heizmann, former board member responsible for commercial vehicles, will now lead the company's China operations.

The automaker said in a statement that the reorganization "underpins the significance of the largest market in the world".

The news release added that the move is part of an extensive management realignment at Europe's largest carmaker announced on June 2, which includes a new board member for its commercial vehicle business and replacement of three Audi board members.

The company also replaced the head of its luxury units Bentley and Bugatti and the chiefs of its commercial vehicle brands MAN and Scania.

Most of the appointments will take effect on Sept 1.

Volkswagen's CEO Martin Winterkorn said the reorganization is an "important building block for implementing Strategy 2018".

The strategy formulated in 2008 called for the company to become the world's leading automaker - economically and environmentally - by the end of the following decade.

Beijing-based independent auto analyst Zhong Shi said the management reshuffle reflects Volkswagen's desire to drive its growth in every business sector including China, one of its most important markets.

"Selling more than 2 million vehicles in a single market is unusual," Zhong said, "The prerequisite for Volkswagen to be the leader globally is that it must do an excellent job in China, better than it does now."

Last year Volkswagen sold nearly 2.3 million vehicles in China, more than one-fourth of its global deliveries, making the country its largest market for three consecutive years.

A company plan released last September said its two joint ventures in China will invest 14 billion euros ($17.6 billion) in capacity expansion and new models from 2012 to 2016.

Volkswagen Group China's current president and CEO Karl-Thomas Neumann, an expert on electric vehicles who took the position in September 2010, will leave his post. Winterkorn said he's seeking a new role at Volkswagen for Neumann, according to Bloomberg news service.

Media reports speculated that the change was partly due to recent publicity over problems with Volkswagen's China-made direct shift gearbox (DSG).

The company declined to comment on those reports.

The carmaker recently extended the warranty in its DSG transmission to 10 years or 160,000 kilometers in China to restore consumer confidence after many customers complained about abnormal noise, excessive shift shock and overheating.

The General Administration of Quality Supervision, Inspection and Quarantine arranged talks with Volkswagen representatives two times but the company did not launch a recall, stating the issue is related to driving comfort but not safety.

Instead it began to offer a free service in March to update software, which proved to have controversial effects - some car owners said it didn't fix the previous problems but weakened power performance and increased fuel consumption.

The national quality supervision administration is still investigating the issue.

hantianyang@chinadaily.com.cn