VW to stop Empire-building

For a number of years, the VW Group has been steadily expanding its portfolio with the aim of becoming the biggest car manufacturer in the world, at least by number of cars built. The expansion was every bit modelled on the old GM or Ford model, in which small and unprofitable brands were assumed by the larger brand, with resulting economies of scale; it often however resulted in a sort of Frankenstein’s monster, with cars built from a rather limited parts-bin.

Now, Matthias Muller, the current VW Group CEO, is looking to reverse the policy of Ferdinand Piech and Martin Winterkorn, a course that saw VW take control of the likes of Porsche and Ducati and MAN and Scania and Skoda and SEAT. Now, all 12 main brands in the Portfolio will be reviewed along with all of the side businesses, with the new course designed to move away from a growth-driven model and into one that puts ever increasing emphasis on car-sharing technology and development of electric vehicles.

According to Handelsblaat, a German newspaper, the plan would see the scrapping of at least 40 models from the current line-up, leaving a mere 300 for customers to choose from; this is amidst the scandal of Dieselgate and the company trying to reclaim its green credentials within Europe, where it used to have a 24% market share.

Already there is opposition to the plan though, with the Government of Saxony, one of the major VW shareholders, and the unions involved already said to be wary of any reduction in the workforce, particularly at home. The second glitch could be the electric car technology, which is still in its infancy and hasn’t managed to gain true market acceptance yet.

Nearly every global car manufacturer has announced the shift from ‘carmaker’ to ‘mobility provider’, so why not VW as well. There is very little new in the announcement from Muller. So, even if EV and autonomous cars do start to gain market traction, VW may find itself in a very crowded market for years to come.