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A New Management Team As Volkswagen's Drastic Overhaul Continues

By John Rosevear – Dec 19, 2015 at 2:20PM

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VW announced a new, streamlined senior-management team, as CEO Matthias Mueller continues his dramatic overhaul of the scandal-plagued German auto giant.

VW CEO Matthias Mueller spoke to a journalist at a press conference last week. Mueller on Thursday announced a big overhaul of VW's senior management team. Image source: Volkswagen. 

Volkswagen (VWAGY -1.39%) CEO Matthias Mueller officially named the new members of his senior management team on Thursday, as he continues his moves to remake VW in the midst of a global emissions-cheating scandal.

The details: A leaner senior management team for VW
The promotions are part of a larger structural change: The number of top executives reporting to VW's CEO has been cut nearly in half.

The key appointment is that of Ulrich Eichhorn, a former Ford (F -7.61%) and VW executive who will return to take over as the VW Group's research and development chief. He replaces Ulrich Hackenberg, a 30-year VW veteran who was a major figure in the Group's recent growth -- but who was forced to leave as a result of the diesel emissions-cheating scandal.

The other appointments include Fred Kappler as head of sales, Michael Mauer as chief of design, Wolfram Thomas as manufacturing chief, and Ralf-Gerhard Willner, who will be in charge of the Group's product and "modular toolkit" platform strategy.

Mueller said in a statement that the remaking of his team was "almost complete," suggesting there may be one or two more appointments to come. All of the appointments announced on Thursday will take effect in the first quarter of 2016, VW said.

What the CEO had to say
"These structural changes speed up the decision-making process, reduce complexity and increase efficiency. The Group Board of Management can focus more closely than previously on overarching issues of the future, safeguard cross-brand synergies and further develop overall strategy," Mueller said in a statement.

It's a big move by Mueller to put his own stamp on VW as he looks to transform the company's culture and refocus it on future technology. "We are focusing in particular on the technological changes that impact the future of mobility -- from electrification to the digital transformation," he said. "Our goal is to play a decisive role in shaping the transformation of the automobile. Our new lean structure will enable us to develop the considerable potential of our Company, its brands and employees to great effect. We will see faster decision-making and more efficient action."

What it means in context: Mueller's dramatic overhaul of VW continues
Since taking over VW in the aftermath of the initial allegations that VW cheated on emissions tests for years, Mueller has moved to position the company to move past the scandal -- and away from the cultural and structural problems within VW that contributed to the decisions to cheat.

VW for years has been known as a bureaucracy-heavy, autocratic organization. It's thought that the decision to install cheating software in millions of diesel-powered vehicles was likely made by a small group of engineers who feared for their jobs if unreasonably aggressive targets for price and performance were not met. 

In a press conference last week, Mueller said VW needed a significant shift in culture. Specifically, he said he wants to foster more open discussions, closer cooperation between groups, and a willingness to allow mistakes. He also wants to delegate more authority to people at lower levels of the organization. 

What it means for investors: Big changes could mean an opportunity
Mueller's plan is strongly reminiscent of the cultural changes that then-CEO Alan Mulally drove to transform Ford over the last decade. One notable point from that effort: Mulally also realigned Ford's senior management team fairly early in his tenure, making a point of promoting people who bought into his plan to transform Ford's culture from one of infighting to one of cooperation. 

It's a small point, but it's another one that might suggest Mueller is taking notes from Ford's experience as he seeks to overhaul VW on the fly. If so, and if he's successful, VW could become a very intriguing investment opportunity. Keep an eye on it.

John Rosevear owns shares of Ford. The Motley Fool recommends Ford. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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