Volkswagen Group Leader Herbert Diess: Volkswagen could become the Next Nokia

Volkswagen Group leader Herbert Diess feels the pressure. The car world is changing and doesn’t look like it did just a few years ago.

In a meeting with the group’s leaders yesterday, he said the traditional carmaker’s time is over. He warns that Volkswagen could become the next Nokia if they do not change course at a rapid pace.

This entails several changes, including the producer group shifting its focus away from hydrogen cars, and to fully work on battery-powered electric cars.

German engineers want more hydrogen cars: There is too much focus on electric cars
Thus, Volkswagen will reduce its focus on fuel cells, as according to Diess, it will be at least a decade before this technology is competitive with electric cars. They do not shut down the development.

Fears a new Nokia

The Nokia 5530 was one of the early Nokia touch screen mobiles after the arrival of the iPhone.
The Nokia analogy is probably appropriate. While Apple opened the sale of iPhone in June 2007, and Google along with HTC in 2008 released the first Android phone, Nokia was late in responding to the threat.

January 2009 started the sale of their 5800 XpressMusic. The phone had a version of the Symbian operating system customized to the touch screens, which even at this time appeared old-fashioned. The phone lacked much of what Apple and Google had baked into their systems. It was no success, and the same can be said about the sequels, including the Meego system that was to take over for Symbian.

Nokia battled backwards and ended up selling its handset division to Microsoft, which later dropped it after Microsoft failed with its Windows Mobile operating system, and even tried with Android phones.

Nokia went from being the dominant player in the mobile market to being wiped out in a few years.

In this analogy, maybe the electric cars are Android and iPhone, diesel and gasoline Symbian, and fuel cells Meego.

It gets a little too easy, however, as the challenges are about more than just engines. Software, self-driving and mobility services are some of the key words.

He points out that they need to be better at software and automotive electronics, as well as producing far more electric cars and batteries that make it possible to meet the emission requirements in different markets.

Another problem for the Germans is profitability. Selling a lot of cars is one thing. Whether one manages to make money from them is something else. Therefore, Mr Diess believes that the group must focus more on profit margin than sales volume. He refers to Bentley, which sells 10,000 cars a year, without making money on them. He would prefer that they sell 5,000 cars a year and had a 20 percent margin, he says, according to Automotive News.

Automakers and unions have called for help from the federal government. Yesterday it became clear that Angela Merkel’s government is in the process of launching measures to help support the industry media writes.

The plan is to introduce wage subsidies to car manufacturers and their subcontractors. So far, nothing has been agreed, but if the government partners SPD and CDU manage to agree on how it should be implemented, and the Riksdag votes for the plans, it can provide stability if there is a decline in the activity of the German automotive industry.


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