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AUBURN HILLS, MICH. (Sept. 6, 2007) — Volkswagen of America, Inc. today announced that as part of its new strategic direction, the Company will relocate its U.S. corporate headquarters to Virginia and also streamline and restructure its U.S. operations. The new business strategy will bring Volkswagen of America, with its brands, Volkswagen and Audi, closer to customers, increase competitiveness, and achieve sharper focus on key markets.
Volkswagen of America, which is a wholly owned subsidiary of Volkswagen AG, the world’s fourth largest automaker, will begin the transition from its current location in Auburn Hills, Michigan to Herndon, Virginia in April 2008. The new 185,000-square-foot facility is expected to be fully occupied by the end of 2008, and it will house the U.S. headquarters for Volkswagen of America, Inc. It will also include the U.S. headquarters for Audi of America, Inc., Audi Financial Services, Volkswagen Credit and other affiliated operations.
The Company’s total workforce at its current headquarters is roughly 1,400. Of these, 800 are full-time employees and 600 are contractors or employees of service providers are assigned to the Company. As a result of the relocation and realignment:
Approximately 400 positions will be transferred to Northern Virginia (new headquarters)
Positions at the new headquarters will be filled with employees who relocate, and new hires
300 full-time positions and 300 contractors or service providers will remain in Oakland County (current headquarters)
Approximately 400 positions will be eliminated
“With these changes, Volkswagen of America drives the future,” said Stefan Jacoby, incoming President and CEO of Volkswagen of America. “It reflects a major new commitment to achieving our Company’s goals in the world’s largest car market. We are excited about moving our headquarters to Northern Virginia, where we will be closer to key markets and customers.”
Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG, added, “We are strongly focused on the U.S. market. This is a top priority for our Company, and we are confident that under Stefan’s leadership, we will continue to serve our current U.S. customers well and add many new customers.”
“Our excitement is tempered by the fact that we need to reduce our workforce overall and by the realization that this does not come as good news in Michigan. However, we will remain a member of the Auburn Hills community, where we will continue to house certain key business activities and retain a workforce of approximately 600 people,” said Jacoby. “These changes are necessary to allow Volkswagen of America to meet the needs of our customers and remain competitive in the U.S. market. We must undertake an aggressive new direction in this market and these are critical first steps.”
Volkswagen of America will add approximately 400 jobs to the Northern Virginia region.
“Volkswagen’s decision for Virginia is a strong affirmation of the Commonwealth’s business-friendly environment, location, market access and infrastructure,” said Governor Timothy Kaine. “The caliber of companies already located in the region and the proximity to Dulles International Airport were huge factors in the company’s decision.”
Volkswagen of America received an attractive, comprehensive incentive program for the relocation that includes $6 million in cash-grants from Governor Kaine’s office.
Volkswagen of America has already taken steps to reduce its workforce through attrition, early retirement offers, and voluntary separations. Further reductions will occur as a result of organizational realignment associated with the move. Additionally, approximately 600 employees and contractors will stay in Oakland County, Michigan, to support a variety of functions, including important financial and technical operations.
“We need fewer redundancies, less bureaucracy, more creativity, and more openness. Moving and streamlining our operations give us an opportunity to naturally transform the business so we can compete successfully in the U.S. market and better serve our customers,” added Jacoby. “We want to connect with our customers better, and these changes will help us do that.”
Jacoby was named Volkswagen of America President and CEO in June of this year, and takes up his responsibilities this month. His extensive experience with Volkswagen AG in global markets includes a prior assignment in the United States, as well as senior positions in the Controlling, and Sales and Marketing areas for Volkswagen. He was head of Controlling in Japan in the early 1990s, and had responsibility for the Asia-Pacific Region in the late ‘90s, where he was instrumental in bringing about the further expansion of two Volkswagen joint ventures in China. Most recently, Jacoby was executive vice president of the Volkswagen Group, responsible for sales and markets worldwide. Jacoby will reside in the United States and work from the Company’s new headquarters in Herndon.
Jacoby said he will implement a new strategy that includes five pillars: product, brand positioning, dealer network, organization and, ultimately, the possibility of local production. A premium will be put on connecting more with customers, and fostering a culture of fresh ideas and bold thinking. Additionally, the Company will focus efforts on producing more cars designed specifically with the U.S. market in mind.
“This move and new corporate strategy will benefit our employees, our dealers, and our customers. Market conditions and business strategy 30 years ago dictated we move to Michigan; today they dictate we move to Virginia,” said Jacoby. “With this move and with our new corporate strategy, Volkswagen of America drives the future.”