VW boss says the era of traditional automakers is over

feedback@motor1.com (Anthony Alaniz)
VW boss Herbert Diess

The company is looking to cut costs, and invest in new technologies.

The auto industry is changing. Ford will produce a four-door electric Mustang. GM may resurrect Hummer as an electric SUV brand. Google is developing self-driving cars. It’s a strange time, and one VW Group CEO Herbert Diess says he could see his company go the way of Nokia if it doesn’t adapt fast enough, according to Reuters. Carmakers are stretched, and their future financial survival could be in jeopardy. 

Diess expressed doubts about VW’s ability to adapt to a changing industry at its current pace, telling VW’s senior managers yesterday, “If we continue at our current speed, it is going to be very tough,” according to the publication. He added, “The era of the classic carmakers is over.” 

Times are changing:

VW and others are racing into new automotive technologies and finding unlikely competitions from Silicon Valley, who aren’t always focused on turning an immediate profit. On top of that, VW and other automakers are facing tightening emission regulations and increasing safety standards while having to develop autonomous, electric, and connected cars – all at the same time. That’s a lot

Part of VW’s plan to better position itself involves raising its market value from its current €91 billion to €200 billion. That means the automaker will look to cut costs, reduce complexity, and invest in new technologies. VW could save money with its operations in Germany, Diess said. The company will reduce R&D spending on fuel cells while cutting costs with its mobility services. Another avenue for VW Group is shifting its focus from volume to profits. 

The 2010s saw the auto industry step back from a perilous precipice thanks to the 2008 global recession. For some, it was a shocking dose of reality and a reminder of how quickly even the biggest of ships can sink – or run aground. The 2020s could see seismic changes within the industry. While electric and self-driving cars – and semi-self-driving stepping stones – will do wonders for reducing air pollution and safety – that likely means fewer auto body repair shops, fewer quick lubes, and fewer job opportunities in the industry.