Michael Bartsch: Worst is over for Volkswagen

News Feature

Michael Bartsch has been more like a battlefield commander than a chief executive for most of his two years at the helm of Volkswagen Group Australia.

He landed from America just as the local stoush over DSG gearbox dramas was finally winding down, but only a month before the global Dieselgate explosion.

So Bartsch has learned a lot about the Australian legal system, as well as the attack tactics of the Australian Competition and Consumer Commission (ACCC), Choice and a range of others – including some high-profile legal firms – lining up to bite a chunk out of his business.

He has also had to develop tactics to cope with shortages of key models — mostly SUVs but also the Amarok ute — with the right specifications for Australia, as well as high volume expectations from Germany for both Volkswagen and Skoda.

And that is without worrying about rivals on all fronts, from Toyota to Kia, in every class where Volkswagen competes.

Over the hump

But Volkswagen Group Australia’s managing director says the worst of the company’s problems are behind it.

“We’re through the worst of it now. I think the problems are diminishing -- it’s more noise than anything now,” Bartsch tells motoring.com.au.

“There is no question that it has all impacted the brand, but not in a way that hasn’t been manageable,

“From an Australian perspective, it’s just a case of being aware. We’re independent enough here, and the market is isolated enough here that we run our own ship.

“There is no question it has impacted the brand, but not in a way that hasn’t been manageable. We would have sold more cars last year if we hadn’t had them.”

Unexpected hurdles

But it’s not what Bartsch expected when he was head-hunted for a hometown revival of a car career that started at Holden, then ran though Hyundai and Porsche in Australia, before he cracked the top jobs at Porsche and Infiniti in the USA.

For a time, the tough talker with the impressive track record ran into political problems at Volkswagen Group, which ended in his resignation from Porsche in the USA in the face of an unwelcome transfer offer.

Then a change of management and a reversal of the previous policies led to an offer of his dream job back in Australia.

But it was not what he had hoped. Or dreamed.

The original project in Australia was to put the whole of the Volkswagen family – everything from Skoda and Volkswagen through to Audi, Porsche, Lamborghini and Bentley – under a single operational umbrella. The individual brands would retain their identities and sales channels but share all backroom functions.

But push-back from the brands meant it would never happen and that was when Bartsch accepted the poisoned chalice from Infiniti, working but ultimately failing to ignite the brand in the US when the proposed model line-up was slashed but the sales and profit targets stayed the same.

When Volkswagen came back in 2016 he didn’t need to be asked again, returning to his home base in Sydney – although without the classic Porsche from his garage in Atlanta.

Bartsch took the wheel at Volkswagen from John White, a steady-as-she-goes leader who was returning home to Canada, and immediately shook things up.

That’s obvious from the way he talks about the Dieselgate drama.

“It was a very stupid timeframe with some very stupid people. But it has focussed us to ask introspectively ‘Who and what are we?’. And to define what the brand is in the future.

“Ultimately, you are measured by your products here and now, today. Those products have allowed us to move on.”

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Product and supply, not rivals

So that’s the global view, but what about Australia?

“The biggest challenge I have here is not the competition. It’s the pipeline and the supply bandwidth.”

He is talking about Tiguan and Amarok and the models that Volkswagen does not have, some of them specific to Australia – like the T-Cross and T-Roc – and others leaving holes in the global line-up.

“We’re under-represented in the SUV market. Particularly in the small and the large. We are selling about 25 per cent of our vehicles in 55 per cent of the market.”

“We can move Volkswagen to 70,000 or 80,000 vehicles. But to do that we have to have the right market coverage. At the moment it’s about 62 per cent and I need 85 per cent coverage to get to those volumes.

“Everything is right. My challenge is supply. We just need the product. In some way I would rather work in an undersupply environment than over-supply, because then you are in the Hyundai-Kia world.”

And there he goes with another swipe at the South Koreans, something he started when he said “No-one dreams of owning a Hyundai” in his early days, and before Hyundai landed the i30 N to rival the VW Golf GTI and confirmed the Genesis G70 sports sedan.

But Bartsch makes no apology and repeats his belief on where Volkswagen sits in Australia.

“The way we see ourselves is as an aspirational brand. We’re an aspiring middle-class brand. We see ourselves as top of the volume players.

“You have to look at it in terms of the DNA of the products. You look at the design language. Engineering quality. Performance of the vehicles relative to competitors in the segment.

“We’ve not in the volume game. It’s not where we are positioned. And our price position will not let us compete at $19,990 like a Kia or a Hyundai.”

More SUVs coming

In future, Bartsch is looking for more heavy lifting from the Amarok and wants more SUVs, from the future babies to the Atlas that was developed for the USA.

“We are going through that again. When they were doing the feasibility, we didn’t have enough volume in right-hand drive. The UK was not interested and South Africa was not interested with no diesel.

“We are working vigorously on a right-hand drive argument. We’ve got our fingers crossed.”

And the two others, especially the Polo-sized T-Cross?

“We remain ambitious about securing both products in 2019.There is definitely an opportunity with those vehicles.

“T-Cross is certainly in our sights for next year. There is no final word on T-Roc.

Turning back to the top and the impact of Dieselgate in Australia, Bartsch can see the link between the emissions scandal and electrification at Volkswagen.

“There is an irony in this, I guess. There is no question that the catalyst for the drive for this [EV] has accelerated as a result of the emissions crisis,” he says.

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EV onslaught coming

Bartsch has sampled the future and is keen.

“The first time I drove an electric car I didn’t know what to expect. That was an electric Porsche Boxster and it reminded me of riding a motorbike really fast.

“The noise was left behind, so all I heard was the road and the wind. And I found that thrilling.”

He also has a firm view of the future.

“It’s easy in a lot of ways to over-think this. The beginning of the E transition will really start from 2020 in Europe. And, by 2025, it will be in full gear.

“It’s unclear yet exactly what the roll-out will be in Australia. But our expectation is that we will follow suit. There will be a lag, there always is. But we’re part of the general planning.

“This won’t be a white-to-black transition. This will be progressive. If you look at Sydney or Brisbane or Melbourne it is as dense and there is the same pressure on infrastructure as any city in Europe.

“There needs to be clear evidence that the cars are coming. As gas stations followed cars, so will the infrastructure to support electric vehicles.”