Audi boss Bram Schot
The new CEO Bram Schot plans a drastic austerity program at Audi.
(Photo: AUDI AG)
Ingolstadt If the AudiSupervisory Board meets on Thursday, then the management report for 2018 will probably be sobering. In the third year of the diesel crisis, sales are declining, yield in the basement, and the prospects are bleak. The rivals BMW, Mercedes and Tesla are hurried.
On the other hand needs Audi Billions for electromobility and the mother Volkswagen the dividend from Ingolstadt for their own conversion. That should be judged Bram Schot, The Dutchman, who has been the regular CEO of Audi since December, wants to end the misery with a drastic restructuring program. His plan: Audi should save a total of 15 billion euros by 2022.
On the way there “I do not know any taboos,” says Schot in the Handelsblatt interview. Thus, one third of the engines should be eliminated and at least one in ten leadership positions deleted. TAudi also wants to save its night shifts at the parent plant in Ingolstadt, Since the workforce enjoys protection against dismissal until 2025, the job cuts must be regulated by partial retirement and severance payments.
“Of course, the cost level is too high,” admits Schot. In order to create a connection to the competition, Rupert Stadler’s successor wants to accelerate into electromobility. If every fourth Audi has an electric drive by 2025, Schot wants to reach this goal “one to two years earlier”.
Current club events
In addition, Schot wants to introduce a China board and thus give even more weight to the largest Audi sales market. But at least as important is the cultural change. Audi, so far characterized by hierarchical power structures, should be “open, female and younger,” promises the new Audi chief. “I need the collective intelligence of this company,” says Schot, adding, “Otherwise I’ll lose.”
Read the complete interview with Bram Schot here:
Audi is in deep trouble with the exhaust scandal and homemade problems. They are now as emergency help to pull the cart out of the dirt. What does your plan look like? I do not see myself like that. The industry is changing, and at Audi there are certainly some home-made topics that we tackle. In this environment, we are currently deciding what priorities we set. It is clear that we can not dance at every wedding. That’s why I focus on electrification and digitization.
How important is it that you are the right chairman of the board and not acting as before? Inside, I acted from day one as if I were the CEO. I know how to rebuild an organization and how to bring people together. I enjoy it, and seeing the reaction of the Audians in recent months, I am convinced that we are on the right track.
How much time does your work eat up the diesel scandal? The effort is considerable. But we have made really good progress. All documents are from the Kraftfahrt-Bundesamt, and we have also informed the investigating authorities.
Nevertheless, Audi is not in the lane, the paragraphs are still going back. We were not sufficiently prepared for the switch to (the test procedure) WLTP. We are now largely in control of the subject, even though we have to deal with the second part of the WLTP this year. It was a real challenge, but we learned something from it, that we are too complex. We focus our offer consistently on what the customer really wants, and now come out with significantly less.
What have you taken out of the program? We have deleted engines and variants that were built specifically for a few markets. Overall, we reduced complexity by around 30 percent. We no longer afford models and equipment that are little bought by the customer. Although we massively slim down, we will hardly lose sales volumes as a result.
Can you achieve the savings of more than € 15 billion by 2022? We really want to reach that goal. In addition to sifting through the model range, we have a number of measures that will relieve us financially. I’m talking about a streamlining of the management and savings in material costs. That’s probably the thickest chunk.
What do you think about the costs compared to the competition? Compared to the competition we have some catching up to do. We can catch up because we are part of VolkswagenGroup are. For all models, we want to increase synergies through closer cooperation. This is especially true for Porsche, We use these advantages more intensively than before.
Will this closer cooperation with the sisters lead to Audi needing fewer engineers? Can you guarantee the job to all 12,000 developers? We have a guarantee until 2025. In fact, we will need more developers in some areas as we develop technologies such as automated driving. And there will be shifts to new job profiles. We have to become younger, more international and more female. We will do that through natural fluctuation. Management is expressly not exempt from this.
So there will be cuts and we have too many executives on board today. One level – about ten percent of the line – we will be able to take out. In recent years, the number of managers has increased more than that of employees. We have to get there. I’m not worried about the number of jobs. Rather, I worry about whether mobility will be affordable in the future.
What are you doing there, I think the dynamics of change are underestimated. The demand for electric cars will rise much faster than expected. People love electric driving.
The expectation of Audi was so far that in 2025 every fourth car sold is a Stromer. Is this no longer valid? In my view, we will reach this goal one to two years earlier. At the end of next year, we already have twelve electrified models at the start. Now we have to see that we ramp up the production for it quickly.
Diesel scandal: How Audi of the pearl of the VW Group became a problem
Will not the price be an inhibitor? Especially batteries are expensive. We expect additional costs, which we have to pass on to the customers. Even burners will cost more, as they have to meet the additional emission requirements. Mobility thus becomes more expensive overall.
Will the customers pay for this? As customers’ incomes will not increase to the same extent, there will be a shift in each segment. Possibly some customers buy smaller cars or just a less powerful drive, Premium will be less affected.
Where do you still want to start? We need to take more care of China, which is by far our most important market. This is clearly in my focus, even at the board level. In preparing the new strategy, we look at the competition more, that is BMW and Daimler, We have to work out what we can learn from them. One thing is clear: our cost level is too high.
How much too high I do not call a number.
What can you learn from the competitor? We have to talk about our depth of vertical integration and discuss which services we will have others do in the future. And we need a new model planning. Our previous plans for the future are too complex and too broad. There’s too much effort going into niches and just increasing our complexity. I have no taboos. It is not enough to say: we have always done so here. This is the definition of insanity: to believe that we will get different results if we continue as before.
Car manufacturers: austerity program in Ingolstadt: Audi wants to cancel the night shift
That’s what Rupert Stadler, your predecessor, said. It’s an advantage to be able to work most of my sales life like myself. Then you always think from outside to inside. Big companies tend to look inside out. When the world changes so fast out there, reality will catch you up. For me, for example, there is no value in being number one in terms of quantities. For me, deciding to be number one in customer satisfaction. Then the rest comes from alone.
Does it then remain at “Vorsprung durch Technik?” We must sharpen the brand. Today we are above all athletic progressive. The brand must also turn green in the future. We invest 14 billion euros in future topics, especially in electrification. But that is not over yet, we will continue with the fuel cell. It is clear to me and my colleagues that we are moving in this direction. We must and will consistently go into transformation.
Do all of you really think so at Audi? That’s no alternative. This world will tick completely differently in 2030 and 2040 than today. Electrification is coming sooner than expected, and we must resolutely go that route. Half things do not exist with me.
Audi is going green, I’m not in the mood to be a bit better than the competition here and there. There are plenty of opportunities to position Audi as a progressive and sustainable brand in the premium segment. With that I want to draw the right consequences from the past. I am 100% convinced of sustainable mobility. And it will work if we combine sustainability with driving pleasure. The acceleration of an e-car is awesome.
Can one prescribe the change from above? So far, Audi has been characterized by tight hierarchies. In the traditional world, it is the older ones who decide. But the world has become so dynamic that we have to give a voice to the young people. This is one of my most important tasks at Audi – I need the collective intelligence of this company. And not only of those who have managed to sit in top management with 50. Otherwise I lost.
Car maker: How VW wants to create the big productivity leap
Can you take any model into the future? Small cars and large sedans? Previously, the motto was: We at Audi can do everything and make only our own development. In future, we need to hear better what the customer really wants. What is certain is that in future we will no longer be able to pull all the drives across all models and series. I would imagine that in the foreseeable future we will be offering a prominent series completely without burners – which is what we are currently deciding.
A superclass series without an internal combustion engine – that would be radical. No propulsion developer will like to hear that: But in the future the preference for a drive will be less decisive. Things are being standardized, thanks to automated driving that limits speed. Vorsprung durch Technik will come across the networking and the overall character.
Announcing change is one thing, the other is implementing it. The past is not our destiny. That’s what I told my executives: I want to reach today’s output with 80 percent of our time. The remaining 20 percent is in creativity. Next Practice is the goal. It used to take us six or seven years to make changes across the model range. Today we have the opportunity to act much faster. For this we create an organization that can do that. Agile, young, dynamic.
Mr. Schot, thank you for the interview.
More: The diesel scandal has badly battered the image of VW’s premium brand. But the causes for the crash of Audi continue to fall back. Read how Audi of the pearl of the VW Group has become a problem case,
*/
]]>
The most important news every morning in your inbox.