VW Group Seeking Ways To Defuse Tensions Between Its Brands

VW Group will focus on making VW, Skoda and Seat more distinct in order to reduce tensions within the company.

Matthias Mueller, VW Group CEO, said that the company’s executive board has laid out a new plan for the three mass-marker brands in Europe based on 14 customer groups, Reuters reports.

"The key challenge is (to achieve) a perfect market coverage with clear territories for the brands," Mueller said during a strategy meeting in Wolfsburg on Thursday. "We must now be able to better use the synergies that our unique alliance of brands offer than we have done to date."

This move comes after last week’s report saying that certain VW managers and unions were looking into curbing the competition from Skoda by demanding to move some of its production to Germany and force the Czech brand to pay more for the shared components.

Skoda’s main union reacted to the news, threatening to cut back on overtime work, while Czech Prime Minister Bohuslav Sobotka demanded talks on the issue with Skoda executives.

Mueller said that the positioning of the brands is "an emotional theme that recently made waves. Of course, it is an extreme challenge sometimes to steer this tanker and to balance the (different) interests," he added.

VW Group’s CEO also said that the next step is to pursue greater differentiation between its premium brands and expand the new strategy to regions outside Europe, without providing more details.