MUNICH — The auto industry’s commitment to change was clearly on display at this year’s Handelsblatt Automotive Summit, where the CEOs of the five Germany-based car companiesÂ laid out their strategies for the near and medium-term.
The CEOs of Volkswagen Group, Daimler, BMW, Opel and Ford of Europe didn’t make any big news at the annual conference, which is organized by the German business daily Handelsblatt. But they underlined their resolve to make sure their companies stay relevant in an era of rapidly changing personal mobility.
“We do not want to be reduced to an automotive FoxConn,” said VW Group CEO Matthias Mueller, referring to the large Chinese electronics group that anonymously manufactures millions of devices for many big-name computer and smartphone brands. “We want to co-determine the transformation,” he added.
InÂ their addresses to the conference, the CEOs directly and indirectly acknowledged that many of their new businesses are still in an experimental phase. They aren’t yet making any money with car sharing, ride hailing or the selling of electric vehicles. But they made clear that rapid change is essential to accommodate a personal mobility market that is evolving very fast.
Listing new activities
The CEOs listed an impressive andÂ growing range of new activities their companies are undertaking to complement and potentially replace their traditional business of selling and servicing combustion engine-powered cars.
For Daimler CEO Dieter Zetsche the transformtionÂ means, among other things, rolling out many more electrically powered Mercedes-Benz models in coming years. “Now is the right time to fully commit to electric mobility,” he said, citing a drop in battery costs and an increase in the range that new EVs can achieve.
VW also has ambitious plans for a broad offering of EVs and Mueller said that, from 2020, the carmaker’s modular electrical architecture will allow it to build cars with an electric range of 600 km. That’s significantly moreÂ than what most EVs can reach today.
Another key part of the carmakers’ transformation involves offering car-sharing services. Most carmakers have formed separate companies for this. Opel CEO Karl-Thomas Neumann said Opel parent General Motors plans to bring its new-mobility brand Maven to Europe as well.
The CEOs left no doubt that they are repositioning their companies. “The job for our industry today is to reinvent ourselves and maintain our acceptance and position,” BMW CEO Harald Krueger said.
But comments by Krueger and his CEO colleagues also underscored the scope of the challenge. “The brands that have defined themselves in the last 100 years will have to redefine themselves,” said Ford of Europe CEO Jim Farley. For Ford, that means expanding the definition of mobility to include new technologies and new business areas.
VW’s Mueller said Europe’s largest car group and its competitors will have to combine theirÂ traditional engineering strengths with state-of-the art information technology. “But excellent IT development alone won’t be enough, just as building excellent cars won’t be enough,” Mueller said. “Both are needed.”
The transition the auto industry is undertaking will have to be managed together with partners, BMW’s Krueger Â said. Speed is key here. “If we combine our know-how more strongly in partnerships with IT service providers, we can clearly become faster,” he said.
The CEOs acknowledged that the car industry has been slow in adopting a new mindset. This at least in part resulted from “a typically German scepsis about new things,” VW’s Mueller said. “While we were still debating the rake angle of our rear windows, Silicon Valley had already started to look at the car as part of the Internet of Things.”
How long will it take to change the more than 100-year-old business model of the global car industry? BMW’s Krueger projected that the current phase of transformation “will surely take three to four years.”
VW’s Mueller said such change processes never really end. Said Mueller: “It will take a while.”
-By Arjen Bongard