Last year I had the chance to visit VW’s hometown of Wolfsburg in Germany. I was struck by Hitler’s old Beetle factory that is still churning out new cars and being the hub of VW’s massive wheel of car, truck and motorcycle manufacturing. In fact, from Wolfsburg, the Volkswagen Group controls what is one of the world’s largest car companies with spokes from the hub radiating into every continent on this earth.
Currently the Volkswagen Group is made up of these companies:
- Volkswagen
- Skoda
- Seat
and…
- Audi
- Lamborghini
- Ducati
and…
- Porsche
- Bugatti
- Bentley
and…
- MAN
- Scania
- Volkswagen Commercial Vehicles
I’ve put the VW companies into four separate groups because that’s how VW suggested the massive company would split itself into four different holding companies. As you can see, the holding companies are organized by type and brand with luxury car companies grouped together, sports car companies grouped together and so on.
With today’s stunning news that Volkswagen has expanded the number of cars equipped with emission deceiving software to 11 million cars, I can’t help but wonder if the damage to the VW group has gone beyond the $7.3 Billion that VW announced it would set aside to pay for damages and to restore the company’s reputation.
In other words, is it time to breakup the Volkswagen Group into 12 individual companies or does the sharing of technologies and business partners still rule the day?
The EA189 TDI which is at the heart of the expanding Dieselgate scandal is the 2.0L four-cylinder engine which includes the Selective Catalytic Reduction (SCR) technology. This software is also said to affect EA188 and the 2015 EA288 generation of the four-cylinder. What’s perhaps even more troublesome is that these engines are also potentially in the Skoda cars, SEAT MPVs, and certainly in the Audi A3. This means that the damage to VW’s reputation is spreading like cancer to the other car companies under the VW umbrella.
There’s a lot to be gained by breaking up the VW Group into 12 individual companies including:
- Preserving and sheltering potentially billions of dollars worth brand equity
- Potentially generating billions of dollars of stock value with independent brands
- And perhaps most importantly, isolating and insulating the engineering teams and leadership from the sins of the VW Group
Thee are difficult issue and questions that VW’s board will be forced to face in the weeks and months to come.
Once upon a time (after the second world war when there was nothing in Wolfsburg, but a partially destroyed town and an derelict VW Beetle factory) the victorious United States and British Generals asked Henry Ford if he would consider taking over VW production at Hitler’s former factory. The catch, all he had to do was resume production of new cars. In other words the United States and the U.K. offered Henry Ford the remains of VW for free. He declined the offer.
I wonder if today’s VW board made the same offer to Ford again for Volkswagen (of course excluding the other brands) if Ford’s management would have the same reply as old Henry Ford himself?
