The German manufacturer, who consolidated its position as world number one in 2019, must meet the challenge of its transformation into a technological company, the only guarantee of its survival, analyzes Jean-Michel Bezat, economic journalist in the “World”.
Losses & profits. Herbert Diess, owner of Volkswagen (VW), is renowned for his outspokenness. Before 120 group leaders, gathered on Thursday, January 16, in Berlin, he made no secret of the fact that “the storm has only just begun” in the automotive world, where the future is in the electric vehicle. This Bavarian arrived at the head of the giant of Wolfsburg, in April 2018, after the “dieselgate”, the scandal resounding on the faked diesel engines; since then, he hasn’t stopped putting pressure on his teams.
Everything is fine, apparently. The company with twelve brands (VW, Audi, Porsche, Seat, Skoda, etc.) sold nearly 11 million vehicles in 2019, confirming its position as world number one. But it must take up the “gigantic challenge” of its “radical transformation” into a “technological firm” – the only pledge of its survival. When Tesla, which will open a factory in Berlin in 2021, displays a valuation worthy of a “tech” company (83 billion euros), VW has that of a traditional car manufacturer (90 billion euros) , while it produces nearly twenty-five times more vehicles than the Californian. Mr. Diess wants to double it and asks his managers to focus more on margins than on volumes.
400,000 jobs threatened
Alas, he judges that his teams are dawdling when they have to make a “radical turn” towards the electric. VW will only be entitled to “one test,” he warns. And the year 2020 will be crucial. After having invested more than its big competitors in batteries – and it continues to do so to develop in the Chinese market, VW will have to sell hundreds of thousands of electric cars. Not only to generate profits, but also to avoid the huge fines planned by Brussels: this year, the fleet of new cars sold in Europe should not emit more than 95 grams of CO 2 per kilometer.
For Diess, the road is still long: in 2020, it will be necessary to “sacrifice sacred cows” , he warned. Is this the announcement of a new weight loss program, when it has already planned to remove about 10,000 by 2023? 400,000 jobs would be threatened in Germany if the car industry lost its competitive advantage. An “extreme unrealistic scenario” , according to the employers of the sector, who has however just warned that he will not escape a new slimming cure in 2020.