VW CEO Diess: ‘Automotive spring will come, but it will be rock and roll’
Herbert Diess, CEO of the Volkswagen Group, thinks his company has turned the page and is ready for future challenges. But surely now, you can’t take things for granted and much will depend on the governmental politics in the matter.
On Thursday we talked about the consolidation movement. Herbert Diess has his view on this, but he doesn’t think that the group has to grow further through acquisitions.
“I think a consolidation movement is on its way. Some of our competitors are under pressure and moving into that direction. The Chinese market, for example, huge as it may be, is too fragmented, there will have to be consolidation there. Volume is key, scale will be the right answer for some.
But not for Volkswagen?
“We already build 10 million cars per year, we are very strong in China and have a good worldwide presence. At the moment, we’re not looking for consolidation. Collaboration yes, but no taking-over or fusion.”
VW is under pressure about its profit margins…
“At the moment we are in a transitory period which demands huge investments. If we can keep up our current profit margin I think we will have done well. I’m very attentive to the generation of cash-flow and at the moment I’m satisfied about that.”
Not everybody shares your optimism. Isn’t the entire car sector sailing in bad weather?
“There will indeed be a period where VW has to invest huge amounts of cash to succeed in the paradigm shift that lies before us. Electrification means changing practically everything and that is very difficult for the entire car industry. VW can manage the shift and still make money. If we do everything right, there will be a new automotive spring, but meanwhile it will be ‘rock and roll’.”
Doesn’t Europe need to have its own production of batteries for electrical vehicles?
“The energetic and industrial transition will also change our relationship with our suppliers. If we talk about 20 to 40% of electric cars, this demands 10 giga-factories for battery production, for Europe only. The question is not where we will produce it, but will there be enough capacity to deliver? All suppliers will have to work together.”
VW hast just confirmed that it wants to invest in a battery producer but it didn’t mention its name. The South-Korean energy and refinery company, SK Innovation, has claimed to be the chosen one, where the factory will be built isn’t clear yet.
You’re not in favour of the German-French initiative to create a European battery industry?
“Of course, I am. But there are already three factories under construction in Europe. Those will have to cope with demand until 2023. The German-French initiative will have its importance for the next generation of batteries.”
How are you preparing yourself for the Brexit?
“Brexit is not manageable. We have one factory in the UK and one brand that will suffer: Bentley. Seat also is involved. If there will be a no-deal Brexit that will be tough, but we’ll survive.”
What do you think about the evermore stringent CO2 emission rules?
“I always ask politicians if they’re serious about their goals. Applying the current situation to the 2021 rules signifies that the car industry will pay over 30 billion euro of fines…
Is the 2030 goal more reasonable then?
“Even then it’s a very rapid shift our industry has to make. To succeed we have to sell between 20 and 50% electric cars by then. Or to put it otherwise, we will have to close 10 engine factories and 5 gearbox plants. Now, this is a challenge. But can we do it? Yes, we can. But governments will have to do what is necessary to support these changes. They have to invest more in renewable energy and respect the Paris Climate agreements.”