Analysts Say Volkswagen's Management Reshuffle Not Enough to Create Momentum

Management reshuffle is not enough to create momentum that Volkswagen need to address its structural issues amplified by the Chinese economic slowdown, according to analysts.

Europe's largest car maker lets Chief Executive Martin Winterkorn serve two more years until 2018, while finance chief Hans Poetsch was named chairman. As per Channel News Asia, this reshuffle removes any management uncertainty that has been troubling the company since former Chairman Ferdinand Piech was ousted from his position in April against Winterkorn. The power struggle between Piech and Winterkorn has been going on for a long time. There are reports that Piech still has influence behind the scenes despite being ousted.

According to Reuters, there are analysts, however, who believes that this management reshuffle is a missed opportunity to let outside experts join the company. Now, the company's restructuring is expected to solve underperformance abroad, and it is targeting 5 billion euros of annual cost savings at its turbulent core division.

Analyst Stuart Pearson of Exane BNP Paribas said choosing to give Winterkorn two more years over new outside expertise is not the radical change investors where hoping for from the German company.

On July 28, Toyota reported that it sold 5.02 million cars from January to June, while Volkswagen reported on July 17 that it sold 5.04 million cars, according to St. Louis Post-Dispatch.

Although VW has overtaken Toyota as the biggest carmaker in the world when it comes to sales, this company still remains very difficult to manage. Reforms can be easily hindered by labour representatives, who make up half of the 20 supervisory board members.

Winterkorn pushes to bring VW to a new era that focuses on self-driving technology. Reports from company sources claim that Winterjorn's excessive involvement in strategies has delayed the launch of certain models, such as VW's Gold and Lamorghini's Aventador.

According to Center of Automotive Management head Stefan Bratzel, "It remains to be seen whether the reshuffle will really help it going forward."