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VW fights back with new Tiguan amid China, leadership woes

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Volkswagen has suspended the R&D chiefs of its core VW brand, luxury division Audi and sports-car maker Porsche, sources familiar with the matter said on Monday.

[FRANKFURT] Volkswagen is using the redesigned Tiguan, its top-selling sport utility vehicle (SUV), to fight back in a slowing Chinese market and elsewhere as it grapples with doubts about its leadership.

VW's most significant new model in 2015 may provide relief to the German carmaker, whose focus this year has been deflected by a rare power struggle and public discussion about cost cuts at its troubled Volkswagen car division.

VW proposed earlier this month to extend the contract of Chief Executive Martin Winterkorn and to make finance chief Hans Dieter Poetsch its next chairman.

The move was criticized by some analysts as a missed opportunity to steer Europe's biggest automotive company into the era of digitalisation with new leaders, five months after Chairman Ferdinand Piech quit in a power struggle with Winterkorn over strategy.

The first overhaul of the Tiguan since its 2007 launch, to be unveiled at the Frankfurt auto show on Monday, heralds a raft of new SUVs and crossovers VW plans to field in the coming years in the fastest-growing vehicle segment, two sources at VW said.

"New product is key in tough times," said Stefan Bratzel, head of the Center of Automotive Management think-tank near Cologne. "The new Tiguan is giving VW a good break, also from the strife in management." "VW is buying time until it has resolved its structural problems," Mr Bratzel said. "They are almost in crisis mode."

The Wolfsburg-based carmaker is redrawing its structure to overcome underperformance abroad and boost profits and will reveal the steps it plans to take later this year.

"We are in the middle of setting the course for the next decade," Mr Winterkorn said an interview with Frankfurter Allgemeine Zeitung published on Saturday. "That is nothing less than the reinvention of Volkswagen."

The hope is that the new Tiguan will steer the focus away from leadership issues, and back to cars.

With 2.7 million unit sales, the Tiguan is the most successful of any model introduced during Mr Winterkorn's eight-year reign as VW brand chief.

Analysts said a lighter and sportier version of the compact SUV may help limit the damage in China - VW's and the world's biggest market - where a decline in Volkswagen car sales has been accelerating since March. A plug-in, hybrid Tiguan will be on display at the car show.

The Tiguan is China's best-selling non-domestic compact SUV and only trails Great Wall Motor Co Ltd's Haval H6 in the vehicle class, according to research firm IHS Automotive.

The new pecking order of VW's leadership will also be on show in Frankfurt, together with the new Tiguan.

New brand chief Herbert Diess will be in the limelight on Monday for the first time since joining VW in July, alongside fellow executives.

After spending more than two decades at the helm of the German carmaker, former chairman Piech is expected to miss the show, a source at VW said.

"We have had more speculation about personnel this year than in Mr Winterkorn's entire term of office," one of the VW sources said. "The new Tiguan will help us steer the focus back to cars."