Why run heavy when you can run lean?
With an estimated value of €80-billion, you wouldn’t think the Volkswagen Group as a firm that would be overly keen on streamlining and downsizing. Yes they’ve set the example of widespread part- and platform-sharing, which has allowed cars like the Bentley Bentayga and Volkswagen Touareg to have commonalities, but it seems that the top brass in Wolfsburg want to make lean what has been previously running a little rich.
While marques like Volkswagen, Seat, Skoda, Porsche, and Audi consistently bring returns back for the parent company, several other marques are the ones that consistently grab the headlines. Of their dozen-or-so mobility brands, it’s marques like Lamborghini, Bentley, Bugatti, and Ducati that tend to capture the imagination of the masses. Problem is that this business of imagination-capturing may be profitable for now, but will serve little relevance as the industry moves towards a world of lower, stricter emissions.
By 2025, the Volkswagen Group expects to expend some €30-billion into electrification technology alone. By 2030, electrification will exceed 40% within all of the marques under the VAG umbrella and by 2050, the company aims to have a fully CO2-neutral range in terms of both the products themselves and the process within which they’re made. That’s no small target, and so to achieve what’s being billed as Vision 2030, the company’s got to make some cuts and slashes where needed to ensure that SS-VAG can stay its course and remain one of the leading forces in the industry.
Automobile suggests that the first details of Vision 2030 have started to drip slowly down from the management board members down to the senior managers, with four main focuses made clear – restructuring of the global manufacturing network, priority on the core brands, emphasis on EVs, autonomous driving, and connectivity, as well as the streamlining of key technologies and innovations.
The report suggests that VAG is aware that they lack the sort of pragmatism and bold-leadership needed to confidently lead the company into the next century, and that the company is running way too heavy to be cost-efficient going forwards. Naturally, the employee unions have already begun pushing back against Vision 2030, given that workforce shrinkage is a given if VAG intends to achieve what it’s set out to.
Vision 2030 will demand the Group focus on three brand-new EV platforms: MEB for the compact cars and medium-sized cars (led by Volkswagen), PPE for medium- to large-cars (with development shared between Porsche and Audi), and J1 for high-performance (and high-value) cars like the upcoming Audi e-tron GT and Porsche Taycan. MEB, PPE, and J1 will become the basis of all of VAG’s new products, slowly taking over the combustion engine portfolio, which itself will reduce complexity and variations by up to 60%. There will also be a gradual, but steady phasing out of manual transmissions, for obvious reasons.
“In the long-run, we want to scale back the portfolio of conventional models and concentrate instead on a fast-growing family of EVs. With the ID model range, Volkswagen is about to demonstrate the benefits of fusing diversification and standardisation.” – Herbert Diess, Chairman, Volkswagen Automotive Group
The earlier paragraph about the EV platform also alludes to the next pillar of Vision 2030; The focus on core brands. It’s suggested that as part of their drive to go lean, only Volkswagen, Porsche, and Audi will stay their course in terms of product strategy. The remaining brands may be merged with these core marques, if not reinvented or divested altogether. But to that end, Volkswagen may choose to create an all-new brand specifically to park a range of full-EVs, sort of like Tesla, where they can also get away with testing out new-age mobility solutions & ownership processes.
Bentley especially is a point of contention for VAG, with a senior strategist within the company saying:
“Why invest on a backward-looking enterprise when you can support a trendsetter? A proud history and excellent craftsmanship alone don’t cut it anymore.” – Source, Volkswagen Automotive Group
Lamborghini is another sore spot for VAG in their quest for lean-ness, as while they’ve committed to a replacement for the Aventador supercar, chairman Herbert Diess also said:
“I am not prepared to let every sports car have its own bespoke drivetrain.” – Herbert Diess, Chairman, Volkswagen Automotive Group
Well bye-bye V12, then.
Going back to the beginning of this article, while most company bosses would be more than happy to helm and maintain a firm worth in excess of €80-billion, Diess is keen to go down this path with the intention of doubling VAG’s value.
MEB will be widely utilised between firms like Audi, Volkswagen, Skoda and Seat, PPE will be offered only for premium & sport/luxury applications. But between them, MEB & PPE should be able to fill the gaps that’ll be left in the range with the eventual retirement of internal combustion engines.
While this writer can fully comprehend the thought process of VAG’s top management, there’s a touch of wistfulness about the whole thing. Brands like Lamborghini, Bugatti, Bentley and Ducati have enjoyed renaissances under the watchful eye of the Volkswagen Group and while there’s no doubt that buyers will jump out of the woodwork once acquisition opportunities arise, there’s the concern about whether or not the new minders of these brands will treat them with the same respect and reverence shown by VAG. A concern this writer harbours is that under new minders, Bugatti may be reduced to a maker of merchandise and Lamborghini could end up looking like pre-Geely Lotus. And that would be a sad, sad demise.