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Volkswagen has new boss but same focus: China

World's top automaker seeks swift decision-making with leaner organization

Herbert Diess, Volkswagen's new chairman under changes announced April 12, is familiar with Toyota from his BMW days, having served as a point man for their technological partnership.   © Reuters

WOLFSBURG, Germany -- Top-selling global automaker Volkswagen aspires to be a sleeker, quicker-moving force under new chief Herbert Diess, with a sharper focus on China, the world's biggest market and a proving ground for electrification.

"With a new, more compact structure, we are laying the groundwork to be faster in our decision-making and implementation," Diess told reporters here on Friday in his first news conference as head of the German group.

Diess, chief of Volkswagen's namesake passenger car brand, replaced Matthias Mueller as chairman of the parent's management board. Thursday's changes also include restructuring measures aimed at negotiating a fast-changing business environment.

The reorganization arranges the 12-brand automotive empire into the volume brand group, which includes Volkswagen; the premium brand group, consisting of Audi; and the superpremium brand group, including Porsche. Volkswagen Truck & Bus will be separated out for a planned stock market debut.

Another key change is the creation of a China region.

The Volkswagen group delivered a record 4.18 million vehicles to customers in mainland China and Hong Kong last year, including 189,000 imports. The Chinese market carries significant weight not only for group earnings, but also as an electrification testing ground, Diess told reporters.

"China will have a decisive effect on the success of our future strategy," he said last month at the world premiere of the Touareg sport utility vehicle in China. He will visit Beijing later this month to attend an auto show as group chief.

Diess has worked at autoparts leader Robert Bosch and is a former BMW executive tasked with overseeing development at the luxury-car maker. He joined Volkswagen's management board in 2015, just a few months before the diesel emissions scandal came to light.

Mueller took the wheel during those difficult days, and profit resurged on his watch. The diesel crisis is mostly becoming a thing of the past, said Hans Dieter Poetsch, chairman of the supervisory board.

Like other automakers, the group now faces new forms of competition and needs funding to strengthen such areas as electric vehicles and automated driving. Volkswagen Truck & Bus, slated for a market debut as early as 2019, has an estimated valuation of several billion euros, or billions of dollars. Proceeds would help fund the development of electrification technology.

As new players enter the automotive arena, the impetus for realignment and partnerships within the industry has shifted from expanding scale to defending turf from the likes of Tesla and Uber Technologies.

The loose alliance of Volkswagen Truck & Bus and Toyota Motor-controlled truck manufacturer Hino Motors, also announced on Thursday, shows the sense of urgency shared by the top two automotive groups.

Repeated acquisitions brought Volkswagen to its current size. But another major one is not planned, Diess said on Friday. He did not rule out further alliances and realignment down the road, underscoring the heavy investment needed for automated driving.

Diess is familiar with Toyota from his BMW days, having served as a point man for their technological partnership. His knowledge of the Japanese auto industry could make him a catalyst for even closer alliances.

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