VW exec Sedran shares views on auto cooperations

The 41st International Vienna Motor Symposium, scheduled for April 22-24, was to bring together 66 speakers, 60 exhibitors and some 1,200 participants to learn about the latest engineering and powertrain challenges and technical advances.

Instead, it became a virtual event, as organizers were forced to cancel the gathering because of the coronavirus outbreak and associated restrictions on travel and movement. Symposium participants were given access to videos and texts of some of the presentations.

Automotive News Europe was to co-host a session entitled “Cross-Company Cooperations,” on how auto companies can work together to meet new technological and regulatory challenges. ANE is pleased to make available a number of speeches and abstracts from that session.

Volkswagen Commercial Vehicles Chairman Thomas Sedran was to give the opening talk of the session.

The following is an abstract of his presentation.

It is now common knowledge that the international automotive industry is facing the greatest transformation in its 100-year history. But this doesn’t make it any less true or any less relevant. The big issues here are well known: in the next decade the conventional combustion engine will be increasingly replaced by alternative drives. In the medium term, e-mobility offers the most convincing solution for greater climate protection and meeting the targets of the Paris Agreement. In addition, the fuel cell will play an important role in the long term, especially for large and heavy vehicles.

The second major driver is the growing importance of software in vehicles. A modern car has around 100 million “lines of code”, i.e. programming lines. That’s already more than an Apple operating system, for example. And this number will increase a hundredfold with further digital assistance systems on the way to autonomous driving. The share of the value added in cars that is based on software is growing rapidly. Car manufacturers need completely new competencies, only some of which can be covered in-house.

After all, the way that people use their cars is changing -- albeit more slowly than expected. This is partly because the importance of the car as a status symbol is declining for young adults. More important, however, are the requirements in cities and urban areas. In view of air and noise pollution, congested roads and overcrowded parking garages, local governments will no longer be willing to tolerate large cars (the majority of which are used by just one passenger) on the roads -- and especially parked -- in their cities. New ways of sharing and temporary usage are called for; multi-modal mobility concepts consisting of public, semi-public and private traffic.

The car industry must prepare for these issues. Business models, development and production processes, training and job descriptions will change. And it is also clear that no company will succeed in the transformation on his own. Size and synergies are what count here so that the considerable investments pay off and expertise is quickly built up. New partnerships at all levels of the value chain are therefore already shaping the industry. Supplier relationships are changing, for example in the field of battery cells, where manufacturers are securing the necessary capacities through strategic alliances and participation models. At the same time cross-sector partnerships are being established in the wide field of software development.

The extensive cooperation between Volkswagen and Microsoft is an example of this. There are also new mobility service alliances: for example between General Motors and the ride share provider Lyft -- or between Daimler and BMW in Germany, which have merged some of their activities.

Needless to say, all these parameters and challenges also shape the business of Volkswagen Commercial Vehicles (VWCV). As one of 12 brands in the Volkswagen Group we developed a new strategy a year ago: GRIP2025+. We have a clear plan. We shape the transformation at the top of our industry to ensure long-term success for the brand. “We transport success!” -- today and in future.

Our strategy focuses on three business areas:

• Perfect offers for cost-conscious commercial customers
• Emotional vehicles for leisure and family
• Innovative mobility and transport services

What does this actually mean?

Firstly, we are one of the leading manufacturers of light commercial vehicles in Europe today. And that’s how it should stay. We will further expand this position together with Ford, our most important competitor and new cooperation partner. This increases our profitability and secures the capacity utilization of our plants in the long term.

VWCV and Ford perfectly complement one another in terms of regional strengths and products. For example, Ford is very strong in North America while VWCV has a strong position on the European domestic market. In the future we will bundle our purchasing, development and production capacities. This enables us to better serve the very different needs of the customers. We produce in larger volumes, thus achieving economies of scale and saving costs. We open up new markets worldwide with new, jointly developed products -- in this way we stay competitive and create growth opportunities. The first contracts have been signed: the "Framework Agreement for General Cooperation" and the "Pickup Development Contract" for the successor to the Amarok. Further steps will follow. Possible vehicles include transporters for commercial customers and a joint city van.

Secondly, we still build premium vehicles for leisure and family and here we are continuing an important traditional line of our business. We are very successful with the Multivan, Caddy Beach or the California models. These emotional and very popular products remain an important part of the brand core of VWCV. In 2022 the most important product of the coming years will be launched: the ID. BUZZ and the ID. BUZZ CARGO. The ID. BUZZ is the full-electric and zero-emissions version of the legendary T-series. The Bulli for the electric era -- and the most visible sign of VWCV’s consistent path to sustainable and zero-emissions mobility. Our goal: to electrify about 80 percent of our vehicles by 2025. Depending on the version, the ID. BUZZ can transport people or goods. Combined with state-of-the-art digital technology it will also serve as the basis for autonomous driving.

This leads to the third and perhaps biggest step of our transformation: we are expanding our current business model beyond the pure vehicle. We are becoming a provider of mobility services. The key words are: “Mobility as a Service” (MaaS) and “Transport as a Service” (TaaS). This refers to new mobility and transport services which we will make money with in future. We offer services along the entire value chain: from the connected car to mobile online services and operational autonomous vehicles -- for example as robotaxis. To this end, we at VWCV assume responsibility for the development of autonomous driving throughout the group. The decision in the summer of 2019 to acquire a stake in the Ford subsidiary Argo is a central component of this. Furthermore, we are gaining important experience with MOIA, the Volkswagen mobility service provider. MOIA was launched in Hanover and is now also very successful on the roads of Hamburg. There specially developed shuttle buses produced in Osnabrueck are in use based on the eCrafter. Customer feedback is excellent and we are getting insights into the requirements for such vehicles.

The coming two to three years will show how successful we are in the implementation of this strategy. I am convinced that partnerships are an important building block for success at all levels of our business – starting with comprehensive development projects and platform concepts in the Volkswagen group of brands through strategic alliances with other manufacturers and the integration of small and large companies that enable us to offer new mobility and transport services. How open we are to such cooperation and how well we succeed in managing these cooperations – this will help decide the future of Volkswagen and Volkswagen Commercial Vehicles.