VW production chief leaves amid production troubles

BERLIN Fri Aug 1, 2014 11:23am EDT

The Volkswagen logo is seen at the Frankfurt Motor Show (IAA) in this September 10, 2013 file photo.  REUTERS/Pawel Kopczynski

The Volkswagen logo is seen at the Frankfurt Motor Show (IAA) in this September 10, 2013 file photo.

Credit: Reuters/Pawel Kopczynski

BERLIN (Reuters) - Volkswagen (VW) has replaced its production chief Michael Macht, who oversaw the introduction of a manufacturing platform which was designed to cut costs, a day after the company reported a drop in operating profit.

VW is increasingly relying on its MQB modular platform, a production system introduced two years ago, to save money by using more common parts across its range of brands and models.

But the drive to produce a greater variety of cars is proving tricky, particularly at VW's main Wolfsburg factory, leading to costly overtime and delays in production of its top-selling Golf model.

Macht's resignation follows the publication of second-quarter results on Thursday which highlighted the growing troubles at the core VW brand, where operating profit plunged by over a third to 572 million euros.

Macht will leave VW with immediate effect after almost four years in the job, Volkswagen said. Macht, a former Porsche executive, became VW group production chief in October 2010.

"Michael Macht has furthered development of the VW production system," Chief Executive Martin Winterkorn said in a statement. "We thank him for his achievement."

Analysts have hailed MQB as the most important automotive initiative for years. The new platform features a far greater degree of flexibility and parts commonality than at Toyota, General Motors and other competitors.

"MQB is the central tool for VW to improve margins," Hanover-based NordLB analyst Frank Schwope said. "They can't allow any slippage here."

VW has enjoyed a period of unprecedented growth, boosted by emerging-market buyers of its upmarket Audi brand. Its sales have risen more than a half to 9.7 million vehicles in 2013 compared with levels before the financial crisis, and it is set to hit a 10-million sales target in 2014 - four years early.

But the rapid expansion has led to a costly proliferation of models, especially at the VW brand. Winterkorn has now ordered a cost-cutting drive at the division with the goal of increasing savings to 5 billion euros per year from 2017.

Last month, Winterkorn had called on managers to step up their game to achieve a universal roll-out of MQB.

VW said Thomas Ulbrich, head of production at the carmaker's main passenger-car brand, would take over duties from Macht on an interim basis until a successor is found.

(Reporting by Andreas Cremer; Editing by Kirsti Knolle and Shadia Nasralla)