It's time for Volkswagen's president to 'slaughter the sacred cows'

Times are changing, and the heads of some of the world's largest automakers know it. According to Volkswagen Group CEO Herbert Diess, it is time to focus on profit margins while making a major shift toward electrification.

On Thursday, the Financial Times (subscription required) reported that Diaz told 120 executives in Berlin that automakers need to "slaughter some sacred cows" and that "the era of the classic automaker is over."

Diaz noted that while Tesla is regarded like a high-tech company, VW is regarded like a car company, and the German automaker needs to shift to the former because its software expertise will determine VW's future.

The CEO noted that there is a lack of urgency within VW for this shift and said that a "radical change of direction" is needed to move into the electric vehicle era.

The Volkswagen Group reported sales of nearly 11 million new vehicles in 2019, but Dees reportedly hinted that further splitting of brands within the group may be necessary.The VW Group currently has 12 brands, from Ducati and Audi to Porsche and Lamborghini, Bentley.

The reorganization of the automaker's brand lineup would provide "a clear focus on the core business," Dees said. That business is making money, he said, noting that the group needs to focus less on volume and more on profitability.

Dies singled out Bentley, a luxury car brand, noting that it did not make a profit last year despite selling 10,000 cars. 'I would rather deliver 5,000 cars and get a return of at least 20%.'

Radical change in the industry is accompanied by a necessary radical rethinking for those involved in it. Says Dees, "The storm has only just begun."