Volkswagen Boss: Move Faster, or Go the Way of a Second-rate Phone Maker
Nokia isn’t having a good day, what with Volkswagen CEO Herbert Diess likening it to an Edsel or Tucker. The VW chief contrasted the phone maker with sales leader Apple when discussing his company’s future, claiming VW will need to move much faster if it’s to stay at the front of the pack.
To further this goal, some things will need to move to the back burner.
As reported by Reuters, Diess laid out his plan to overhaul the automaker in the face of new challenges to top managers following a Thursday board meeting. Electrification, autonomous driving, and strict emissions standards all weigh on VW’s finances, forcing the automaker to choose which projects are most important in the near-term.
“If we continue at our current speed, it is going to be very tough,” said Diess of his goal of lifting VW’s market cap from $91 billion to $200 billion. “In summary this is probably the most difficult challenge Volkswagen has ever faced.”
Boosted productivity, reduced costs, and stable income — all the while leading the charge into electric and autonomous vehicles — is the near-future VW wants. To do it, some things will have to take a backseat.
Things like hydrogen fuel cell development, which no one believes will set the market on fire anytime soon. Things like VW’s MOIA ridesharing unit. Both hydrogen and mobility services will see their funding cut to free up cash for more important things, Diess said.
“We need to reduce our engagement and stretch it, until the prerequisites for better profitability are given,” he added.
As for real, actual cars, Diess says he wants the company to focus more on profit than volume.
“Take Bentley for example, 10,000 deliveries,” Diess said. “It would have been even more impressive if we had a margin higher than zero. If I’m totally honest, I would have preferred 5,000 deliveries and a margin of over 20 percent.”
Cost cutting and efficiency finding has become the main pastime of German automakers. Last year, VW entered into an alliance with Ford Motor Company while in search of synergies. In a bid to lower operating costs by $6.6 billion by 2023, the automaker announced the cull of up to 7,000 jobs.
At the same time, VW is readying an electric vehicle offensive. The first ID-badged model built on the automaker’s dedicated MEB architecture rolled out in Europe in late 2019, to be followed by a slew of models spanning the bodystyle gamut.
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