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  Interview with Volkswagen CEO Martin Winterkorn: The Auto Industry Crisis 'Is Truly Brutal'

Interview with Volkswagen CEO Martin Winterkorn The Auto Industry Crisis 'Is Truly Brutal'

Part 2: 'So Much Is in Flux at the Moment'

SPIEGEL: The VW Group was still employing some 16,500 temporary workers at the end of 2008. How many will there be at the end of 2009?

Winterkorn: We will no longer employ any temporary workers. This isn't good news for those affected. But there is no way around it.

SPIEGEL: Will you now stop the construction of a new plant in the United States, where VW plans to build more than 150,000 additional cars?

Winterkorn: No, why should we? I assume that by 2011, when the plant goes online, the United States will have overcome its problems. And then the new model that will be built there will be just the right thing: a car that offers plenty of room and yet is very fuel-efficient.

SPIEGEL: Wouldn't that jeopardize the future of the Emden plant, where the Passat is produced for export to the United States?

Winterkorn: Not at all. The Passat will still be sold in the United States, as will the Jetta and the Golf. We just want to increase our sale in the US with the new model. Our goal for 2018 remains in effect, that is, to be selling 850,000 cars in the US market.

SPIEGEL: You assume that the crisis will have been overcome in two years and that worldwide automobile sales will continue to grow. But growth until now has been based on a credit bubble. Doesn't the industry have to adjust to the fact that future growth will be minimal at best?

Winterkorn: In China, for example, growth will not progress as steeply as expected, at least not initially. But it will happen eventually. Europe and the United States are weak at the moment. But the US will always be an enormous automobile market. You're lost without a car there. Or take Russia: It is a market with three million cars today, but it will eventually be one with five to six million.

SPIEGEL: And Russia has now been hard-hit by the crisis…

Winterkorn: …I know, I know, but don't be so pessimistic! A lot of things were paid for with credit in Russia. Borrowers are now paying 20 to 25 percent interest on those loans. It is clear that there are problems. But Russia has the largest reserves of natural resources, including iron and natural gas. The market will develop in the long term, and the VW Group will benefit from it.

SPIEGEL: With all due respect for your optimism, does VW have the right cars for the future? You have bet on luxury, Bugatti, Bentley and Lamborghini, on 12-cylinder engines. But now affordable and environmentally responsible cars are in demand.

Winterkorn: We proudly unveiled a three-liter Lupo 10 years ago. A few journalists showed up when we unveiled the new model. But 10 years later, when we unveiled a Bugatti model, the photographers practically trampled each other to death. And customers weren't exactly beating down our doors for those three-liter cars. The time is probably ripe for those kinds of cars today. We will unveil a new Polo that consumes 3.5 liters (per 100 km, or 68 mpg) at the Geneva Motor Show.

SPIEGEL: But aren't these just alibi cars, so that you can pursue your true passion and be able to build sports cars like the Audi R8?

Winterkorn: We do both, and I'm proud of that. There are customers who buy sports models and those who buy fuel-efficient cars. This is precisely the strength of a multi-brand group.

SPIEGEL: But the crisis has changed attitudes toward the car for many people. It is seen less as a status symbol and more as a means of transportation. Do you have to revise your model policy?

Winterkorn: We have to shift our emphasis a little. Smaller engines are in demand. One could imagine, for example, an Audi A8 with a four-cylinder diesel engine that consumes only a little more than five liters (47 mpg). That would have been inconceivable a few years ago. But, on the other hand, we will not allow the Lamborghini or Bentley product lines to die for this reason.

SPIEGEL: But their most important customers are gone, for now: the investment bankers, who used to use their bonuses to buy a Bentley or a Lamborghini.

Winterkorn: Yes, and that's why we are selling fewer of those cars, for now. But we have to ask ourselves what a car like this should look like in the future. Perhaps a Bentley has to get an aluminum body, making it 300 to 400 kilos lighter. Or a carbon fiber body for a Lamborghini. In any case, we will continue to develop these brands.

SPIEGEL: The future of another corporate brand is in jeopardy. SEAT sells cars mainly in southern Europe, and these markets are falling away. How long can the VW Group afford losses at SEAT?

Winterkorn: The Spanish car market has been cut almost in half. Instead of 1.6 million, only 800,000 cars are being sold there now. Of course, this has a very strong effect in SEAT, with its 10-percent share of the market. For now, the company is introducing two new models, and we hope that this will stabilize the brand.

SPIEGEL: Has Wendelin Wiedeking, the CEO of Porsche, the majority shareholder in VW, said how he envisions crisis management at VW?

Winterkorn: I believe that Mr. Wiedeking has no need to be concerned about his investment, given the way we approach the crisis. Porsche's investment in VW was certainly the best thing that could have happened, for everyone involved.

SPIEGEL: Would Porsche have stood a chance of surviving the crisis on its own?

Winterkorn: Porsche clearly benefits now from its ability to use technologies from the VW Group. And the benefit to us is that we have two stable major shareholders, Porsche and the state of Lower Saxony.

SPIEGEL: Other carmakers, like Daimler, would be happy to have a major shareholder. Do you think that Daimler can survive the crisis on its own, or will it have to join forces with BMW?

Winterkorn: A crisis is often the reason for two once-hostile companies to launch into a joint venture. But it's difficult even then. Audi has been part of the VW Group for the past 40 years. But the real cooperation did not begin until 1993, when Ferdinand Piëch became chief executive. There has to be someone who decides which technology will be used. Otherwise everyone will want to develop his own engine and will take every opportunity to undermine cooperation.

SPIEGEL: Can you predict which independent automakers will still be around in three years?

Winterkorn: There will be two Americans, one or two Japanese, one French company, and perhaps one large Chinese company. Daimler and BMW will exist. But so much is in flux at the moment that predictions are very difficult.

SPIEGEL: You didn't mention VW. Are you pessimistic about the group?

Winterkorn: On the contrary: I see us as solid. Of course, the crisis is not just passing us by without affecting us. However, we are in a good position, and we will certainly emerge stronger from the crisis.

SPIEGEL: Mr. Winterkorn, thank you for this conversation.

Interview conducted by Dietmar Hawranek and Armin Mahler