VW bets on new tech to bounce back
Carmaker hopes to move past emissions scandal by focusing on new cars, digital services
FRANKFURT— Volkswagen hopes to bounce back from its diesel emissions scandal with a shift in focus to more battery-powered cars, digital services such as ride-sharing and more SUVs for the U.S. market.
Herbert Diess, the head of the Volkswagen core brand, said Tuesday at a news conference that the goal of the Transform 2025 plan was “to fundamentally change Volkswagen” as it tries to overcome a crisis over cars it rigged to cheat on diesel emissions tests.
The plan foresees new investments in electric-car technology and in software that would enable new ways of using and sharing cars. Diess said that the Volkswagen division alone expects to sell a million electric vehicles a year by 2025. Including the company’s other brands, such as SEAT and Skoda, the Volkswagen Group expects to sell up to three million electrics by then.
He said the company would also “massively step up” its capacity to develop software, aiming to create industry-leading programs and hardware systems for digitally connected and autonomous cars by 2025.
Another element of the plan is in- creasing sales in the U.S. by introducing products that are more appropriate for the market, such as more SUVs and larger cars. This year, Volkswagen-badged cars have only 1.8 per cent of the U.S. market through October, badly lagging competitors such as General Motors, Ford, Fiat Chrysler and Toyota.
Diess also said the company would start making electric vehicles in the U.S. by 2021. Currently, Volkswagen makes Passat sedans at its plant in Chattanooga, Tenn.
“For years, a concept for success in the U.S. has been lacking,” Diess said at the company headquarters in Wolfsburg, Germany. He said the group had been “not on the bandwagon” for shifting market trends there. He said regional managers would get “more local responsibility” to make decisions and meet local conditions.
Diess said the company aims to raise profit margins on sales to 6 per cent by 2025, from just 2 per cent in 2015. Profitability at the Volkswagen brand has lagged due to its higher cost base, the result of a strong role for employee representatives. They have half the board seats and are generally supported by the government of Lower Saxony. Partly as a result, Volkswagen Group makes most of its profits from its luxury brands Audi and Porsche.
The scandal has served as a spur for the company to shake up its management culture and address longstanding issues, such as the cost question in Germany.