VW GROUP'S BIG CHANGES DOWN UNDER by John Crawford

Following on from my story about Renault Australia moving from company ownership of its Australian operation, to a local distributor, comes news of big internal changes affecting Volkswagen, Audi and Skoda’s operations in Australia.

It’s all framed against a backdrop of lowering internal cost structures, and, we are assured, means no change to products sold by each VW Group brand, nor dealerships, nor brand imaging – all will continue as is.

 

The big changes will happen out of sight, in the backrooms of the giant Audi ‘Lighthouse’ building in southern Sydney. 

The current CEO of VW Australia, Michael Bartsch, will become the VW of Australia Group head, but, Bartsch stresses, the current chief executives of Audi and Skoda will remain in their present roles.

 

The administration of all three brands will move into the Audi building.

So, you ask, why now? Well, the German giant has finally woken up to the fact that maintaining three separate brand operations in Australia is simply too costly. Each have their own backroom services and departments, and combining them simply makes financial sense.

 

According to Bartsch, it also allows the unified group operation to negotiate with its German parent for local model considerations, from a much stronger platform.

You are probably wondering if this is just deck-chair-shuffling. Well, no!

All the major global brands want a piece of the Australian market. It’s well-informed, sophisticated, and despite the relatively small population, it is nonetheless important to have a foothold – even for brands with tiny volumes like Groupe Renault and Groupe PSA.

 

I think buyers will ultimately benefit from these efficiencies, but in what way I’m not sure. Bartsch has ruled out discounts, and changing or adding new models.

He says it’s more about maintaining brand integrity and the push for stronger market penetration, without being held back by onerous internal costs.

 

All of this does underscore the Australian market is important, but continuing to operate in a market where 60+ brands compete for oxygen, means the ‘backroom costs’ need to be tightly controlled.

And that’s just smart business.

John Crawford