A Rocky Start for the New Boss | Business| Economy and finance news from a German perspective | DW | 16.04.2002
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A Rocky Start for the New Boss

After a three-year grooming period, Volkswagen introduced their new CEO. But filling previous chair Ferdinand Piech's shoes might be a difficult assignment, especially in the auto industry's current malaise.


Former chair Ferdinand Piech arrives at his going away party in VW's new one-liter car.

It seems even three years of grooming, two years of record results and one day of fanfare was not enough to prevent a rocky start for Volkswagen's new chairman.

Bernd Pischetsrieder (photo), a former BMW top executive, officially took over the reigns of Germany's largest auto concern on Tuesday, replacing highly successful VW chair Ferdinand Piech. On the same day, the new head had to announce orders had dropped 9 percent in the first three months of 2002.

Galerie Bernd Pischetsrieder

Bernd Pischetsrieder, member of the board of management of Volkswagen, pictured in Wolfsburg on March 22, 2001. VW'ssupervisory board, is set on Friday, Sept. 7, 2001 in Dresden, eastern Germany, to elect former Bayerische Motoren Werke AG Chairman Bernd Pischetsrieder to succeed Piech when he retires in spring 2001 at age 65. (AP Photo/Fabian Bimmer/JoergSarbach)

The news is "everything but satisfactory," the new CEO told a shareholders meeting in Hamburg.

Particularly after VW annouced record sales figures last year, the last of Piech's nine-year reign. The "Rottweiler of the auto industry" as one newspaper dubbed him, righted a sinking ship after taking over in 1993.

Turning it around

Faced at the time with heavy losses, particularly in new acquisitions Seat and Skoda, Piech got rid of nine top executives and outsourced labor to Hungary, where VW daughter Audi's factory is, and the Czech Republic, the home of Skoda.

The moves kept the concern's labor costs among the lowest in its league and helped the company to record wins of 88.5 billion euro in 2001 and 91.4 billion euro in 2002.

The success will make Piech a hard act to follow, especially now that the worldwide downturn in the auto industry seems to finally be affecting Volkswagen.

Cutting costs, going luxury

Pischetsrieder, who joined the company in 1999, wants to save 1 million euro in purchases and production in order to at least maintain the record numbers for the coming year.

Schweizer Automobilsalon Phaeton

German car manufacturer Volkswagen's new luxury car Phaeton makes its world debut during the press days at the 72st Geneva International Motor Show, Tuesday, March 5, 2002, in Geneva, Switzerland. The Geneva Show will open its gates to the public from March 7 to 17, with a record number of exhibitors and first presentations. (AP Photo/KEYSTONE/Laurent Gillieron)

He will also have to build on recent ventures Piech made into the luxury market. All eyes are on the Phaeton (photo), the concern’s much-celebrated first luxury car. Volkswagen announced last week that there have already been 1,000 orders, six weeks before the car comes onto the market.

Pischetrieder will also have Bentley, Bugatti and Lamborghini – all Piech acquisitions – to harness in Volkswagen’s charge into the currently profitable luxury market.

But the new chief will have to act quickly to save sinking demand for traditional VW models lke the Golf and Passat. It was those models that brought so much success to his predecessor. Pischetsrieder will need them if he is to continue the trend.

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