In an attempt to decentralise decision-making from its Wolfsburg headquarters VW is working on a “regionalisation” plan to empower subsidiaries to tailor VW-brand products to fit in with local tastes and trends.
Volkswagen is the process of implementing radical changes in the aftermath of last year’s emission scandal where the car maker admitted to fitting up to 11 million cars worldwide with software that enabled the vehicles to cheat during emissions tests. VW subsequently suffered the largest annual loss in its history as a result of the crisis.
Under pressure from company investors to regroup, VW has looked internally as it attempts to deal with the cultural problems that caused the crisis, and regain the market share outside Europe and China.
The company’s new marketing and sales chief, Jurgen Stackman is one of the executives leading the changes.
Previously, the chief executive of SEAT (a VW subsidiary), he said the VW Golf, their best selling model, is a niche product in South America due to its relatively high price tag.
The VW produced Gol, is a far more popular car in that market area. Overall however, the VW brand has seen a decline in popularity due to a delay in coming out with flashier models based on emerging styles coming from Brazil.
Stackman was quick to point out that Volkswagen was still being innovative but in areas that were not catching the local imagination.
“Europeans would perceive innovation more on a technology base,” he said, referring to connectivity, high-tech engines and dashboard apps. But in South America, “how fresh it looks” is more important, he said. “In many emerging markets, the car is still a much more important part of yourself – a status symbol.”
Wherever it’s operating, VW has the same target market: the aspiring middle class, that Stackman referred to as “the sweet spot” sandwiched between the mass and premium segments.
Historically, he said that Volkswagen had incorrectly assumed that this type of buyer always wanted the same style of car. VW’s competitors however, scored points with customers by offering models more locally orientated.
“You can’t just copy what you’ve done, you have to stay connected to what the society will aspire to and actually give it the appropriate time,” he said to the Financial Times. “The key lesson from this is that the one-size-fits-all in the export model is no longer working globally.”
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