VW brand chief Wolfgang Bernhard
Marcus Brandt  /  AFP - Getty Images file
VW brand chief Wolfgang Bernhard will leave the automaker on Jan. 31.
updated 1/11/2007 3:04:29 PM ET 2007-01-11T20:04:29

Volkswagen AG’s new chief executive consolidated his power Thursday, with the automaker announcing he will take control of the VW brand and its current leader will leave the company at the end of the month.

The automaker said in a brief statement that Wolfgang Bernhard, who has overseen the VW brand since May 2005, would leave on Jan. 31.

The decision came after reports surfaced that new Chief Executive Martin Winterkorn wanted to reorganize Europe’s largest automaker after taking over at the beginning of the year.

Winterkorn, who formerly headed the company’s Audi AG unit, was promoted to the top job after Bernd Pischetsrieder stepped down at the end of last year. Pischetsrieder brought Bernhard to Volkswagen in February 2005 from DaimlerChrysler AG, and Bernhard took over the VW brand three months later.

“It was clear that as soon as Pischetsrieder had left that Dr. Bernhard’s position was less secure, since it was Pischetsrieder who had hired him,” said Stephen B. Cheetham, a European auto analyst at Sanford C. Bernstein Ltd. in London.

Besides his CEO duties, Winterkorn will oversee research and development for the company and personally oversee the VW brand, which currently includes the namesake models such as the Polo, Golf and Touareg, as well as brands such as Skoda, Bentley and Bugatti.

Volkswagen said it would reorganize its various brands — Audi, Bentley, Bugatti, Lamborghini, VW, Seat and Skoda, but didn’t say how. The newspaper Sueddeutsche Zeitung, citing unidentified people familiar with the matter, reported that Winterkorn wants to gather the company’s premium brands — Audi, Bentley, Bugatti and Lamborghini — into one group and its VW, Seat and Skoda brands into another.

Volkswagen also said that Jochem Heizmann, the current board member for production at Audi, would assume the same position at Volkswagen on Feb. 1. Another executive board position overseeing sales and distribution was also announced, but no candidate for the position has been tapped.

Bernhard’s departure comes as Volkswagen faces a fierce threat from Asian and European rivals who operate less expensively with lower labor costs.

Despite that, the VW brand has been a bright star for the company with sales up 10 percent in 2006 to a record 3.4 million cars sold.

Volkswagen did not specify a reason for Bernhard’s departure but thanked him for his service.

“The company would like to thank Dr. Bernhard for his work in the past years and wishes him all the best for his future career,” it said, adding that Winterkorn said Bernhard had been a key part of the company’s ongoing restructuring.

Cheetham said the move was also a sure sign of a shift in strategy for Volkswagen, which has come under more influence of Porsche AG, which is controlled by the family of Volkswagen Supervisory Board Chairman Ferdinand Piech.

Stuttgart-based Porsche, Volkswagen’s biggest shareholder, has increased its stake in the automaker to a level just shy of the 30 percent threshold that would require it to make a takeover offer. In December, the Porsche board authorized an increase to 29.9 percent from 27.4 percent.

“This marks the end of the restructuring of Volkswagen,” Cheetham said. “It marks a shift in strategy from a cost reduction strategy to a volume strategy.”

Wolfsburg-based Volkswagen is cutting up to 20,000 jobs, instituting longer working hours at its German plants and trimming costs — a difficult program that Pischetsrieder instituted in a bid to compete with Asian automakers and to try and snare a larger piece of the U.S. market.

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