At first glance, the turmoil that affected the Volkswagen Group throughout the previous year seems to have diminished. The automaker successfully negotiated with trade unions to cut its workforce in Germany by 35,000 by 2030. Volkswagen’s sales of electric vehicles in Europe are on the rise, partly due to Tesla’s setbacks, yet profits plummeted by 40.6% in the first quarter of this year. Additionally, Trump’s trade policies and the errors made by its own management do not inspire confidence. This includes the older issues.
The specter of Dieselgate continues to loom over the upper echelons of Volkswagen, even impacting former employees. Recently, a court in Braunschweig, Germany, convicted former Volkswagen executives and imposed further sentences. Jens Hadler, who led the diesel engine development from 2007 to 2011, was sentenced to four and a half years in prison. Hanno Hjelden, the former head and chief engineer of the electronics division, received a sentence of two years and seven months for serious fraud. Furthermore, Heinz-Jakob Neusser, the head of engine development, along with a manager named Torsten D. (who collaborated with U.S. authorities), were given suspended sentences.
In light of the diesel exhaust scandal, the “touch” issues found in the interiors of contemporary Volkswagen vehicles may seem trivial, yet they have tarnished the reputation of German cars known for their exemplary ergonomics. Previously, chief designer Andreas Mindt acknowledged that the shift to fully touch controls was a misstep and vowed to reintroduce physical buttons for the steering wheel and the five key functions (volume, heating, air conditioning, emergency lights). Now, Ralf Brandstätter, the head of Volkswagen’s Chinese division, has attempted to clarify this sensory oversight. He noted that European drivers favor physical controls within the cabin, valuing reliability and durability, along with superior driving characteristics. In contrast, Chinese consumers are more inclined towards screens, voice control, and artificial intelligence. This divergence in preferences can be attributed to both cultural differences and the significant age gap between European and Chinese buyers: 56 years versus under 35 years, respectively. In recent years, Volkswagen has been developing standardized vehicles in an effort to cater to all global markets.
Oliver Blume, the head of the entire Volkswagen group, also made a statement. He clarified that the automotive giant he leads had been “resting on its laurels” for an extended period and had overlooked the moment when the world began to change swiftly. The framework within which all Volkswagen vehicles were designed in Germany no longer satisfies the needs of consumers in different regions of the globe. Consequently, the German branches of the company required a reorganization, which translates to a reduction in workforce. Furthermore, Blume expressed his concern that contemporary Germans are less inclined to work long hours and are more sensitive to overtime, in contrast to earlier generations who worked six days a week and “did not inquire about working hours.” As a result, the head of Volkswagen is of the opinion that with a 20-hour work week and remote working arrangements, it is no longer feasible to produce competitive vehicles.
Oliver Blume has confidence in the capabilities of both the Americans and the Chinese. In light of the potential increase in customs duties under the Trump administration, Volkswagen’s management is engaging in direct negotiations with the American government, circumventing the European Union. Consequently, the automaker has committed to boosting its investments in the development and manufacturing of vehicles in the United States.
In China, the emphasis remains on collaboration with local partners, which extends beyond just models intended for the Chinese market. For instance, the leadership of the SAIC-Volkswagen joint venture has declared a shift to the strategy of “in China for the whole world,” moving away from the previous approach of “in China for China.” This indicates that soon, Volkswagens designed and produced in China will enter global markets, ultimately challenging the perception of authentic German quality.
