Each powerhouse will bring together resources from multiple agencies to work together in a single location. They are expected to be responsible for creative, digital, social, PR and media.
Speaking to journalists in Berlin today (16 April), Sengpiehl said that each of the five units would be composed of teams from a single holding company – but it is not necessarily looking for the same one to run all five.
Four of the powerhouses will be responsible for top-level strategic output in North America, Latin America, Asia and the Rest of the World respectively, though in each region the brand will continue to work with local agencies for some work, mostly dealership and point-of-sale marketing.
Europe, where Sengpiehl said the individual markets were most similar, will operate differently, with the powerhouse acting as the sole creator of marketing assets – while, as the global HQ, it will also provide strategic guidance to the other regions.
Although VW is headquartered in Wolfsburg, Germany, Sengpiehl said a decision on where to base the European powerhouse had not been made – and London was one possibility, along with “other capital cities”.
The new structure applies only to Volkswagen passenger vehicles and will not affect VW Group’s other brands, which include Audi and Skoda, or VW commercial vehicles.
‘Too many’ agencies
Sengpiehl said the decision to rationalise marketing services in regional operations was a result of the increasing number of products and services the brand was launching, and the corresponding increase in marketing output.
This includes the ID range, a new line of electric vehicles, which are going into production in the next two years.
He said VW used “too many” agencies and production companies and wanted to change this – echoing moves by Procter & Gamble and Unilever to reduce the number of agencies they work with.
“We want to improve our brand visibility and our consistency,” Sengpiehl said. “So we are moving in a direction of making central campaigns. That means of course we collaborate very closely with our European markets, but at the end someone needs to make a decision and produce all these assets.
“In the past we have had a couple of videos, a couple of assets, and now we have masses of content. This is something that no one [market] individually can afford.”
No firm timeline has been announced for creating the powerhouses, but Sengpiehl said he wants the process to be complete by the end of 2018.
VW currently works with agencies including Adam & Eve/DDB and its sister shop, DDB Berlin, which have in the past collaborated on campaigns for the brand.
Sengpiehl said that regardless of which companies won the business of supplying VW’s five regional hubs, it would continue to work with Omnicom Media Group’s PHD, which won Volkswagen Group’s £2bn global media account in 2016.
Sengpiehl took up the role last September, having previously done the same job from 2006 to 2009. He was CMO at Hyundai Motor Europe from 2014 to 2017 and has held roles with WPP, BBDO, Daimler and Nissan.