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Photo Gallery: 'We Have Set Ourselves Very Ambitious Goals'

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SPIEGEL Interview with VW Chief Martin Winterkorn 'The Next Step Is the Electric Car'

Volkswagen CEO Martin Winterkorn, 63, discusses his goal of replacing Toyota as the world's largest automaker, the risks associated with the Porsche takeover and the company's plans to turn around troubled units like Audi, SEAT and Skoda.

SPIEGEL: Mr. Winterkorn, have you succumbed to megalomania?

Winterkorn: What makes you say that?

SPIEGEL: The VW Group plans to almost double its sales, to 10 million vehicles. You hope to replace Toyota as the world's largest automaker. You are building new plants in China, the United States and India. You already have eight car brands, including Porsche, as well as three truck brands and a new stake in Suzuki.

Winterkorn: It's true, we have set ourselves some very ambitious goals for the period between now and 2018, but they're certainly not megalomaniacal. First, we want to be the most attractive employer in the industry. Second, we want to achieve the highest degree of customer satisfaction and, third, a pre-tax return on sales of more than 8 percent. Once we have achieved these three goals, the fourth goal -- that of becoming the world's largest automaker -- will happen on its own.

SPIEGEL: Certainly not entirely on its own.

Winterkorn: Of course not. But we're not just building new plants. We also intend to expand our existing capacities -- in Russia, for example. We want to integrate Porsche and continue to develop our partnership with Suzuki. None of these things happen in a vacuum. Our program requires maximum concentration. We are aware of how ambitious our goals are.

SPIEGEL: Corporations that have also been or wanted to be No. 1 in the world have failed spectacularly. General Motors only managed to survive after being bailed out by the American government. DaimlerChrysler lost billions with its global corporation. Toyota grew too quickly and collapsed. Aren't you deterred by these examples?

Winterkorn: Not at all, because the way we operate distinguishes from General Motors, for example. GM was managed very much on the basis of the financial goals that were set for the individual brands. Of course, our brands also have to satisfy profitability objectives. But our leadership position is based on technology. In our case, senior executives drive cars made by all of our brands, in summer and in winter, sometimes in Africa and sometimes in Scandinavia. It helps us figure out where there are still problems. I myself do spot checks and have vehicles that are ready to be shipped pulled out and inspected. I meet with dealers. This approach allows you to get a completely different sense of what's happening in the company than by simply reading the files.

SPIEGEL: Can the CEO even get involved in such details?

Winterkorn: He has to. It takes a lot of effort, but it's the only way to run such a complex group of companies -- and to do so successfully. There aren't many carmakers that remained profitable during the financial crisis and are now experiencing strong sales and profit growth.

SPIEGEL: We have the impression that the rosy figures conceal many risks. The greatest of those risks, for the VW Group, is certainly the acquisition of Porsche for a total of €12 billion ($16 billion).

Winterkorn: More than anything else, I see the integration of Porsche as a great opportunity. We're not exactly buying a pig in a poke. We know what we're getting: an iconic sports car brand with a one-of-a-kind image worldwide, and an extremely successful and profitable dealer organization, Porsche Holding in Salzburg.

SPIEGEL: Nevertheless, two representatives of the capital side on the VW supervisory board voted against the Porsche takeover. This is unheard of for a company listed on the DAX. Why couldn't you convince those two board members?

Winterkorn: I don't know. The rational issues were all resolved, and the board members' questions had all been clearly answered.

SPIEGEL: Perhaps they feel that the Porsche takeover creates great risks for VW. Porsche faces lawsuits claiming damages in the billions, because investors feel conned by its market maneuver. How great of a threat does this pose for VW?

Winterkorn: I see no risk whatsoever to the Volkswagen Group, because the claims are directed against Porsche Automobil Holding SE. Even if a court were to recognize claims for damages, which I absolutely don't think will be the case, VW would not be affected. That's because we own a share of the operating business, namely 49.9 percent of Porsche AG.

SPIEGEL: Porsche and VW managers were sharply at odds during the takeover battle. Now they're expected to work together in harmony. How is that supposed to work?

Winterkorn: I told our senior executives: We will not behave in Stuttgart the way a few Porsche people did at our company in the past. We want to cooperate and we will. It's already working very well. Everything else is history. And some of the details already suggest to me that we're getting off to a good start. We had excellent talks with the Porsche executives at the most recent top management meeting. It was a long evening.

SPIEGEL: Porsche executives stayed at the bar until the early morning hours. They were probably drinking to drown out their frustrations. After all, almost the entire Porsche executive board was replaced.

Winterkorn: The reasons for that varied widely. CEO Wendelin Wiedeking and CFO Holger Härter left, but there's also another side to the story. Wiedeking's successor, Michael Macht, rose through the ranks to become a member of the VW Group board of directors. He did excellent work previously as head of production and chairman of the management board at Porsche. Porsche is No. 1 in the quality rankings in the United States ...

SPIEGEL: ... while Volkswagen and Audi are trailing far behind ...

Winterkorn: Yes, and I'm also very upset about that. This was one of the reasons we brought in Mr. Macht as head of production for the VW Group. We want him to bring the same successes he achieved at Porsche to Volkswagen and Audi. We are in the process of building a new plant in the United States, which is where we intend to go on the offensive. Quality is at the top of our agenda there.

'It's all a Huge Effort'

SPIEGEL: You promoted your previous chief of planning, Matthias Müller, to CEO of Porsche -- because he follows your instructions to the letter (at Porsche headquarters) in Zuffenhausen?

Winterkorn: You clearly don't know Mr. Müller very well. He contradicted me when he was head of planning in Wolfsburg when we disagreed. Now he is devoting his energy to Porsche. The next 911, the next Boxster, they'll be dream cars. There will also be a new SUV, a little brother for the Cayenne, which might be called the Cajun. We'll make the Porsche brand sparkle even more.

SPIEGEL: Have there been failures? Weren't Porsche executives too focused on the planned VW takeover to deal with day-to-day operations?

Winterkorn: It's certainly noticeable that Porsche hardly ever appears on the covers of the major car magazines anymore. In the past, you'd see a picture of a Porsche on those covers if so much as a new brake disk was being introduced in a model. That sort of thing indicates that the magazines were more interested in financial issues than the product, the car.

SPIEGEL: That was also apparently the case with VW. There are many areas in need of improvement. Let's start with SEAT. The brand has lost close to €800 million ($1.07 billion) since 2005. How could this have happened?

Winterkorn: The situation at SEAT has nothing to do with the Porsche story. Mistakes have been made in product development at SEAT for a long time. But that doesn't mean we simply eliminate the SEAT brand. The brand also pays into the group. It buys 340,000 engines and transmissions. It has 340,000 customers a year, who we don't simply want to give up. That's why SEAT will now drive itself out of a deep slump with new models.

SPIEGEL: SEAT plans to start turning a profit again by 2012. What will you do if SEAT doesn't make it?

Winterkorn: If it comes to that, which I absolutely don't believe, I'll answer your question in 2012.

SPIEGEL: The next area needing improvement is Audi. The brand uses the tagline "Vorsprung durch Technik," or "progress through technology." But more and more people associate BMW with technology. The Munich-based company is considered a leader in fuel-saving technology. Why is Audi falling behind in this important area?

Winterkorn: You have to separate image from facts. BMW has apparently cleverly figured out how to promote the image, with you and others, that its models are particularly eco-friendly. But you've also read the test reports stating that an Audi with a V6 diesel engine consumes less fuel than a BMW hybrid model.

SPIEGEL: Still, many companies are only providing their top managers with company cars with hybrid engines. The Mercedes-Benz S Class and the BMW 7 Series are available with hybrid engines, but the Audi A8 isn't.

Winterkorn: It will become available soon as a hybrid vehicle, as will the new A6. All the excitement over hybrids will settle down once people realize that this is a bridge technology. The next big step is the electric car.

SPIEGEL: The car bodies need to be lighter so that electric vehicles can have a sufficient range. But BMW is also at the forefront when it comes to lightweight construction, an Audi specialty for years. BMW is developing models with carbon fiber bodies that weigh significantly less than Audi's aluminum cars.

Winterkorn: Audi has long been using parts made of carbon fibers, in the A8, for example. Lamborghini makes an entire body out of carbon fibers. We have mastered this technology. So far our competitors have only offered announcements. They still have to prove that they can produce a car for the mass market with a carbon fiber body at a reasonable cost.

SPIEGEL: You also have to deal with problems at Skoda and Bentley. Skoda is competing with Volkswagen  with models that are of high quality from a technical standpoint, but cheaper. Bentley suffered a loss of €200 million. At the same time, you have to convince the group's truck makers, MAN and Scania, to finally cooperate. Do you sometimes feel as if you were juggling 12 balls and you were constantly on the verge of dropping a few of them?

Winterkorn: It's all a huge effort, of course. That's one of the reasons we expanded the management board, hired additional top managers and replaced some people. Skoda has a new CEO and has already corrected its course. One senior executive now devotes himself to making sure that the truck brands cooperate more closely. You can see that we are addressing the issues.

SPIEGEL: And then you also have a very active supervisory board chairman, Ferdinand Piëch. How do the two of you divide up your responsibilities: Piëch makes the decisions and you implement them?

Winterkorn: That's an old prejudice, nothing more. Let me give you an example of how things really work. I don't make a decision as important as the acquisition of a stake in Suzuki alone. Of course I discussed it with the supervisory board chairman. A CEO constantly faces the threat of having too many yes-men around him. That's why I'm pleased that Mr. Piëch is someone who knows the automobile business like no one else and asks critical questions.

SPIEGEL: Piëch has controlled his estate. He has placed it into foundations that make it almost impossible for his children to sell the shares. But the Porsche family owns the overwhelming majority of the shares. What happens if their heirs decide to sell the VW shares to Chinese competitors, for example?

Winterkorn: I'm convinced that the Porsche family, like the Piëch family, will take the right precautions. It will certainly want to prevent the VW Group from being dependent on the emotions of individual family members. In my view, (German electrical engineering giant) Bosch is a model of how a family owned company can be solidly equipped for the future. Bosch is owned by a foundation and is one of the world's best-run companies.

SPIEGEL: You are now 63. Your contract expires at the end of 2011. Will you retire then, or will you remain in your position if the supervisory board renews your contract again?

Winterkorn: I enjoy it, I feel fit and, for that reason, I wouldn't be opposed to keep on working if that's what the supervisory board wants. Not just because I like my job, but also because there are many issues for which continuity at the top is helpful.

SPIEGEL: Mr. Winterkorn, we thank you for this interview.

Interview conducted by Armin Mahler and Dietmar Hawranek
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