FRANKFURT -- Volkswagen Group's corporate structure will be reorganized into a decentralized system with four holding companies running the company's 12 brands, reports said.
Former BMW manager Herbert Diess will be in charge of the holding company that will run the VW, Skoda and Seat passenger car brands. The Audi, Lamborghini and Ducati brands will form another holding company led by Audi CEO Rupert Stadler, according to reports.
Porsche, Bentley and Bugatti will be grouped together in a single unit under current Porsche boss Matthias Mueller. VW Commercial vehicles and the Scania and MAN heavy truck brands will form another division led by former Daimler trucks boss Andreas Renschler, the reports said.
VW is also examining whether it still needs separate group-level executives for sales, production and the Chinese market, reports said. This leaves the future of sales and marketing chief Christoph Klingler and VW's China head Jochem Heizmann in doubt. The group production chief job has been vacant since Michael Macht left in August.
German business daily Handelsblatt first reported the plans on Monday. Reuters and Bloomberg later reported that their sources had confirmed the plans for the new structure.
VW declined to comment.
Breaking with Piech
The reorganization would overturn former VW Chairman Ferdinand Piech's strategy of giving individual brands autonomy to maximize competition between them. It would also break from the centralized management structure developed under Piech.
Piech favored a decision-making approach that relied on a strong leader and a small group of key advisers. VW CEO Martin Winterkorn is pushing for a sweeping overhaul to streamline the automaker after surviving a power struggle with Piech. Winterkorn is seeking to give the group's three largest brands -- VW, Audi and Porsche -- as well as regional chiefs more leeway.
The new structure is designed to improve efficiency and make decision-making quicker, Handelsblatt said. Each business group would decide which models it sells and which markets they are sold in. The head of each holding company will sit on a smaller management board.
VW intends to finalize the structure over the summer with the goal of getting supervisory board approval at the next scheduled meeting at the end of September, Bloomberg reported, citing company sources. Plans may also change after Diess joins VW in July. In addition to overseeing the VW brand, Diess could take on oversight of China in this role, Bloomberg said.
Many industry watchers said Piech made VW Group difficult to control and slow to react to market changes. The group has 600,000 employees worldwide and 119 factories.
Evercore ISI said the bundling of the mass-market brands VW, Skoda and Seat would create a unit that sells 7.6 million vehicles a year with with combined revenues of 119.2 billion euros, earnings of 3.2 billion euros and an operating margin of 2.7 percent, according to 2014 financial figures.
The new structure primarily addresses VW's mass market businesses, Evercore ISI's global automotive research head Arndt Ellinghorst said in a note to investors on Monday. "VW, rightly so in our view, didn't go to the extreme of bundling Audi and Porsche under one roof," he said.
Porsche, Bentley
Ellinghorst also wrote: "Allocating Bugatti and Bentley to Porsche isn't a big deal, at least not for shareholders. For Audi things remain unchanged. Skoda would be most affected and potentially disappointed given its very strong performance over the years."
M.M. Warburg analyst Marc-Rene Tonn said: "VW has in the past often responded slowly to market parameters which are changing quickly. Realigning brands in that way makes good sense. It would clarify responsibilities and speed up decision-making."
Reuters and Bloomberg contributed to this report
