Volkswagen Looks to an Electric Future
It’s been all change at Volkswagen since the emissions scandal, so Craig Thomas spoke to Jürgen Stackmann, the new board member responsible for the brand’s sales and remarketing.
In years to come, authors of marketing textbooks will look back at the effects of the emissions scandal on Volkswagen, one of the world’s biggest car brands, and either hold it up as an example of how to recover from a crisis, or show how it marked the beginning of the decline of a once-great brand.
The jury’s still out on which of these outcomes it will be – there’s undoubtedly more information to come, with the publication of the report commissioned from US law firm Jones Day later this spring – but the company has certainly not held back from making changes at the top of the company to fix its problem.
One of the most astute moves, in the eyes of many industry observers, has been for Volkswagen to bring Jürgen Stackmann back from Barcelona – where he was CEO of Spanish carmaker SEAT – to take a seat on the brand’s board and head up its sales and marketing activities.
Stackmann – who spent 21 years at Ford before joining the Volkswagen Group in 2010 – is an experienced executive who understands marketing and car making. Which will be important, when you consider the challenges that not only Volkswagen, but the entire industry, has to meet in the coming decades. The very future of personal mobility will be up for grabs and only the brands that realise that, and respond with innovation, will survive.
Stackmann is aware of this, but first he has to help restore Volkswagen’s reputation, win back the trust of consumers and fix the cars of existing customers.
This won’t be an easy task, as Stackmann explained to us when we met him at the Geneva Motor Show.
“We will be working with our dealers and our service network to convince each of our 5.6 million [affected] customers that we’re competent, that we deliver a great service and that we can be trusted.
That’s why we’re happy with the way that the first 10,000 Amaroks have been serviced and we had zero complaints from customers. Every time we release the next piece of software, the next vehicle line, we ensure that it’s perfect: everybody has to be convinced that it’s right before we move ahead.
“If you look at the technology of changing what needs to be changed on the car – which is software, essentially – and return the car to the consumer without them feeling it’s changed, it’s bloody hard work. People love their cars and they want them back with the same fuel economy, same noise levels, same power. That’s what we’re aiming at this year and I’m confident that, for the vast majority of our customers, we can achieve that.”
Fixing customers’ cars is a good first step to rebuilding Volkswagen’s reputation, but then what? Will existing owners and prospective buyers come back to the brand the next time they’re making a purchase or taking out a lease? Stackmann seems to think so.
“I went out to the 10 biggest fleet customers to talk to them – which is the first time they’d ever seen a board member in their offices – and hear what they were concerned about. Interestingly, they’re not concerned about our quality or competence: they believe in the value of our cars. They were more concerned about the trust element.”
Initial signs are that the scandal hasn’t done too much damage to the brand, with Stackmann telling us: “The order take in the first two months has been very promising: it’s back to where it was at the start of last year – and last year was a good year for the brand.”
If those figures are correct, it looks as if customers are already forgiving Volkswagen. But what about forgetting? How long will that take?
“It’s tough to predict, but it will take a while,” said Stackmann. “If you get it right, people will forgive. There will be references to this for quite some time, but we’ve looked at other companies that have had similar struggles – Toyota, for example – and it took them a year-and-a-half to get back to where they were before. That’s a realistic timeframe.”
Diesel and alternative fuels
The emissions scandal has raised a number of questions for Volkswagen (and the wider industry) about the role of diesel in a world becoming increasingly concerned about pollution and air quality. VW is sticking with diesel, though.
“We are convinced that we will continue to make diesels for quite a while. If you look at how we achieve lower CO2 emissions – especially in Europe – and the acceptance of diesels among our customer base, we’re convinced that diesel has a good future. We have a job to make them sustainable, green and clean: that is technically do-able.”
That said, Volkswagen is committing its future to becoming a leader in building electric vehicles – a move that has been given added impetus by recent events.
“The issues around diesel acted like a turbocharger, a catalyst that allowed us to focus on electric cars. Sometimes big companies like us do need that impetus.
“There will be some exciting questions to be asked about what will premium mean with electric cars? What will modernity look like with electric cars? That’s a great place for Volkswagen to play a stronger role. Then there’s autonomous drive, which seems crazy, but I do believe – in combination with electric and connectivity – it opens up a new sphere of mobility systems, specifically in metropolitan areas, where Volkswagen can play a role.
“We have 40,000 engineers and we’re sure that if we give them the focus, they will do an excellent job [developing electric cars]. Volkswagen is big, but if we get everyone working in the same direction, we can do some outstanding stuff. The emphasis hasn’t been there, but now the key priorities are shifting to electric propulsion and autonomous drive. The brand is committing to an electric platform that only does electric cars.”
It might be coming later to the electric party than other manufacturers, but Volkswagen is fully aware that the whole concept of future mobility is on the verge of a radical change – especially in our cities.
“We do believe that many metropolitan areas will come to the conclusion that they need to change and build ecosystems similar to what has happened in Norway in past years, with the commitment of everyone going in one direction for long enough and hard enough. Norway has now achieved an electric car share of 20% and it’s amazing to see a country being really serious about going that way.
“We believe in the very near future more and more metropolitan areas will take this approach – and we want to be part of that, rather than wait and be late.
“I believe that there will be a blend of multiple distribution systems. Sharing has peaked, while daily rentals have changed to half-daily rentals, so there’s been some morphing in patterns of renters becoming sharers and sharers becoming renters. I also believe we’ll see some metropolitan areas replacing their mass and volume mobility with individual mobility on demand.
“I don’t think there’s a single way forward, but I do believe that there is a consensus around the globe among politicians that we all want 100% sustainable solutions.”
Silicon Valley challenge
The future also holds challenges from companies such as Apple and Google, but Stackmann thinks that Volkswagen has the disruption from Silicon Valley covered.
“I think we take them seriously enough to take that as a challenge. We’re not afraid. But some of the harder pieces of our industry – the engine and gearbox are highly complex systems – you don’t need to do if you go electric. And that’s the incentive for them to start thinking about getting into this industry.
“I don’t think they’ve really grasped the long-term implications of being in the car industry. Growing demand and quality, keeping cars in good shape for a decade: it’s a pretty complex business that we’re in.”
Considering the six months that Volkswagen has just had, “a pretty complex business” might be something of an understatement – but that kind of attitude might be exactly what will help Volkswagen survive.
Hydrogen? “Further out than electric cars”
EVs are definitely high on the agenda for Volkswagen, so what about hydrogen fuel cells? Is the company about to follow Toyota, Honda and Hyundai in launching a fuel cell vehicle on to the market?
“Hydrogen fuels cells are the next step after batteries, because the question is not the fuel itself, but how does the fuel get created, transported and stored. That is the big question mark.
Fuel cells will play a role, but it’s further out than electric cars.
“We don’t think we need to be forerunners in this technology, because the first question that needs to be answered is how we get customers to move from combustion engines to electric in comfort. As long as customers still have to think about refuelling and recharging, there is a break point in customers making the transition. Range will get sorted and costs will have to come down – which will take longer than people think, but they will come down.”