Winterkorn has had his sights on Toyota from the moment he took up his job in Wolfsburg at the beginning of the year, insiders say. He has pledged to extract better productivity and higher profits from VW.
In March, Winterkorn told a news conference: â€œIn the last five, six years, Toyota has pulled ahead of us and what we plan to do is to reduce the lead that theyâ€™ve got.â€
Wendelin Wiedeking, CEO of sports car maker Porsche, agrees Toyota is the benchmark. Wiedeking, a member of the VW supervisory board, masterminded his companyâ€™s acquisition of a 31 percent stake in VW last year. He is expected to play a role of growing importance in VWâ€™s future.
VW is copying what Winterkorn did when he was CEO of VWâ€™s Audi premium brand. While there, he boosted productivity and initiated â€œRoute 15,â€ a blueprint for growth based on a vast array of new models.
Setting goals for 2018
Now, VW managers are setting goals for 2018. VW is working on â€œa kind of 10-year plan that asks where do we want to stand 10 years from now?â€ a spokesman said.
He declined to discuss details. The plan is still being drafted and will include sales and financial goals, he said. It is due be made public by year-end.
Automakers such as BMW and Daimler have also recently said they are engaged in thorough strategic reviews of their businesses.
Franceâ€™s PSA/Peugeot-Citroen will announce new strategic directions soon too. Renault CEO Carlos Ghosn last year laid out a three-year plan.
Between the fiscal years 2003 and 2007, Toyotaâ€™s global vehicle sales rose to 8.5 million units from 6.1 million a year. Analysts say this was due in part to its early adoption of popular SUV and US pickup models and its strong position in the US. Toyotaâ€™s operating profit margin improved to 9.3 percent from 8.2 percent.
Different growth rates
VW sales have grown more slowly during the period as it battled weak demand in Europe, labor issues at its German plant and unfavorable exchange rates. VWâ€™s global sales rose to 5.7 million in 2006 from 4.98 million vehicles in 2002.
â€œIf we are approaching Toyota, we are approaching it in terms of productivity goals,â€ the VW spokesman said. â€œThe financial side is related: if you are highly productive, you are highly profitable.â€
VW group vehicle sales rose 8 percent to 3.6 million units in the first seven months of the year, The group appears set to break its full-year target of 6 million, due to strong demand, particularly from markets in the developing world.
But the VW group continues to have weaknesses. If it wants to catch up with Toyota, it needs to fix the US market and increase volumes without risking profitability, analysts say.
In terms of productivity, VW should improve design and time to market. Analysts say that, in this area, it can also learn from Toyota.
They also say sharing parts and extending the life-cycle of components are key.
Nathan Kohlhoff, an automotive analyst at Unicredit in Munich, says VW runs the risk of diluting profitability with plans to build more smaller cars. â€œThe question is whether there is enough components sharing across the different models to generate the cost savings they need to produce smaller cars,â€ he said
VW is well underway to improve operations. Platforms and parts modules are being shared across the group. Winterkornâ€™s plans for transverse and longitudinal drivetrain modules build on this.
Commerzbank analyst Albrecht Denninghoff said VW has successively implemented improvements, both on the production and financial side, under previous CEO Bernd Pischetsrieder and former CEO and current Chairman Ferdinand PiÃ«ch.
â€œWinterkorn does not have to start from scratch to put this vision into action,â€ Denninghoff said. â€œThis lends the plan to catch Toyota more credibility.â€