All the unknowns for Volkswagen
The new CEO dispels doubts: Volkswagen will continue its race towards the electric despite the arrival of Blume at the top. Ten new EV models by 2026 and a European zero-emission range from 2033. But there are many immediate problems for the Wolfsburg Colossus: from the Berlin-Paris axis for protectionist measures that tighten relations with China and the US to the problem of the lack of gas in winter which could slow down production further
The road that unwinds in front of Volkswagen's windshield is bumpy, but the Wolfsburg manufacturer does not seem willing to abandon it: it will continue accelerating towards the electric. Word of Thomas Schäfer , new CEO of the German brand after the defenestration of Herbert Diess and the arrival of Oliver Blume at the top of the group. The new CEO just 100 days after his inauguration must help shareholders digest subdued financial results, with an operating profit that stopped at 4.3 billion euros: a gallop considering that it started from 2.6 (+52.6 %), but still lower than expectations which estimated it at 4.6 billion. After all, Wolfsburg was unable to restart production: 2.1 million vehicles were delivered in the last quarter, + 10.6% on 2021, but in the first nine months there were only 6 million, which translates in an unflattering -13%.
For this reason, the estimates on deliveries, previously given an increase of 5-10%, are now seen in line with 2021, which was still a "pandemic" year. Also because, as we will see later, in the event of austerity and a harsh winter, Germany could block industrial production. In China, a distressed market, deliveries grew by 26%. In any case, revenues rose to 70.7 billion euros, up by 24.2% compared to 2021. Net profit fell by 26.5% to 2.13 billion. On the battery car side, the share in the quarter was 6.8%; + 25% to 366 thousand deliveries in 9 months.
VOLKSWAGEN INTENDS TO MAKE THE DIESELGATE FORGET
“The Volkswagen brand suffered from the aftermath of the diesel crisis, but the time for healing our injuries has come to an end,” said Schäfer . “Now let's look ahead. We will focus on the customer, and for this we have created a committee that is dedicated to intercepting and meeting their needs. We will reduce the breadth of the range, focusing on the fundamental models: next year the new Passat and Tiguan will arrive; the ID.3 will have its first restyling, which will lead to improved build quality and software stability. By 2026, we will launch ten new Bevs, from the € 25,000 entry level to the ID. Aero. We are working on an SUV version of the ID.3. By 2030, 55-60% of Volkswagens will be full electric and by 2033 the entire production will be Bev, at least in Europe ”.
Schäfer therefore tries to dispel the doubts: the arrival at the top of Blume , known for not being a big fan of electric mobility and for having repeatedly declared himself in favor of alternative fuels, will not slow VW's race towards the EV car: “Luca De Meo said that it will be impossible for a long time to offer the public an electric car for 20,000 euros? I think instead that we will succeed soon enough. How? Taking advantage of the opportunities that the magnitude of the group offers us. For example, it is time to get out of the logic that each brand should have a life of its own: models of different brands based on the same platform can easily be produced in the same factory, if there is a saving. The differentiation between the brands will always remain, but I don't think the customer is willing to pay more if a car comes from Zwickau rather than Martorell. The same goes for the duplication of functions we have around the world. This year we have saved 220 million euros ”.
TOO MANY INTERESTS IN CHINA?
But there are still many unknowns on the VW road. Starting with China, where Volkswagen makes about 40% of sales and half of profits. And in fact, compared to the French, Schäfer has a completely different opinion: “I do not agree with Carlos Tavares ' proposal to raise barriers against the Chinese. Barriers make everything difficult; better let the market decide. After all, Europe has already had to deal with the Japanese and Koreans: competition helps to improve the product. Certainly the Chinese are dangerous rivals, having a specific expertise on the electric. But they don't scare us ”.
PARIS AND BERLIN THINK ABOUT BUY EUROPEAN ACT
The problem, however, is that Berlin may not agree. “There are China and the United States that protect their industry, while Europe remains open to all. We have to change, ” Emmanuel Macron explained on television. The topic would have been the subject of the recent meeting with the German Federal Chancellor Olaf Scholz and both leaders would have agreed, according to the tenant of the Elysée, on the hypothesis of ensuring that any purchase incentives are reserved only to cars produced in Europe, preparing a measure that follows that of Biden .
For the occasion, Macron would have dusted off an old workhorse: the Buy European Act which he proposed in 2017 but which met with firm opposition both from Brussels, which did not want to violate the WTO agreements in place, and from Angela Merkel , then at the helm. of Germany, determined to safeguard the German automotive which, it is well known, has very strong relations with China. With a pandemic in the way but, above all, with a run-up to electricity that seems to redesign the supply chains, disadvantaging those of the Old Continent, the position of Berlin has changed enormously, while Brussels has already mentioned the possibility of resorting to similar measures in recent days. drastic like those of the USA.
THE "FROST" WITH RUSSIA
As for the immediate, there is the issue of reorganizing production in the event that the German winter reserves weather surprises and turns out to be unexpectedly harsh: with Russia no longer supplying gas, the automotive industry would be the first to having to stop. “Among the medium-term hypotheses, we are focusing on a greater localization of supplies, on a transfer of production capacity and on purely technical solutions”, explained a few weeks ago the purchasing manager, Geng Wu , in a note taken by Bloomberg .
Wu admitted that the emergency solutions being studied on top floors are "similar to those that have already become common practice in the context of challenges related to semiconductor shortages and other recent supply chain disruptions." However, there is a difference: while the car manufacturers have waited a long time before revolutionizing production chains and supply chains due to the absence of semiconductors, here the luggage would seem ready and the risk is to be late anyway. Almost certainly, jobs at home will slim down, where VW has about 30 plants (28, to be precise), from Zwickau to Dresden, via Osnabruck, Emden, Hanover and of course Wolfsburg. Probably the same speech will be made for the Ingolstadt and Neckarsulm factories that produce Audi, while it will be necessary to understand whether Porsche will be interested as well.
And then there are those in Eastern Europe, in Hungary, in Gyor, in the Czech Republic in Kvasiny and Mlada Boleslav, where Skoda and the maxi plant in Bratislava , Slovakia are built. All these plants, being in countries linked to Russian supplies, risk being united by the same destiny. The head of external relations Thomas Steg has already put forward the demands of Volkswagen: “Politicians must curb the current uncontrolled boom in gas and electricity prices. Otherwise, small and medium-sized enterprises, especially energy-intensive ones, will have major problems and will have to reduce or stop production ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/tutte-le-incognite-per-volkswagen/ on Tue, 01 Nov 2022 07:31:55 +0000.