VW to quit selling diesels in the US

Whoever sanctioned Volkswagen’s ‘dieselgate’ will see the price the company is now paying as an executive says VW will exit diesel car sales in the US.

Details emerged as Volkswagen AG claimed it is “comprehensively repositioning itself” through its TRANSFORM 2025+ program which will set the course for the brand over the next decade and beyond.

The new strategy focuses on clearer brand positioning across the various regions and segments, backed by significant improvements in efficiency and productivity. At the same time, the brand will be making massive investments in e-mobility and connectivity. VW says the “new vision which is valid throughout the world is: "Volkswagen: Moving People Forward".

Chairman of the Volkswagen brand board of management, Dr Herbert Diess, said: "Our goals are high and our strategy is very ambitious. We want to benefit from change and to take Volkswagen into the lead in the new automobile industry with determination. Over the next few years, Volkswagen will change radically. Very few things will stay as they are. In the final resort, the new strategy is a major transformation program."

                                Transformation in three phases

In phase 1, up to 2020, the brand will be entirely restructuring its core business and completing a transformation along the entire value stream. At the same time, the company will develop new competences.

In Phase 2, up to 2025, Volkswagen intends to take the lead in e-mobility on the basis of its regained strength as a leading, profitable volume manufacturer. The strategy in this phase aims to create a broader earnings base, for example through new mobility services. Volkswagen also intends to play a key role in shaping the major transformation in the industry expected after 2025. The objective is to achieve a leading role in the new world of mobility by 2030.

A key element of the new strategy is positioning at the top end of the volume segment, near to the premium competitors. To date, Volkswagen has only achieved its objective of becoming "top of volume" in China and Europe. In future, Volkswagen aims to achieve this position throughout the world through a realignment of product strategy – with an SUV offensive in the first stage and the electrification wave in the second stage.

In the third phase, a further element of the new strategy will be a uniform global brand system with a new design concept.

                                         E-mobility offensive

In future, e-mobility will be part of the Volkswagen brand core. "From 2020, we will be launching our major e-mobility offensive. As a volume manufacturer, we intend to play a key role in the breakthrough of the electric car. We are not aiming for niche products but for the heart of the automobile market. By 2025, we want to sell a million electric cars per year and to be the world market leader in e-mobility. Our future electric cars will be the new trademark of Volkswagen," claimed the brand CEO.

The e-mobility offensive is to be financed by a number of measures including the discontinuation of certain low-volume, low-earnings conventional models and model variants. This will release funds in excess of €2.5 billion for e-mobility.

The brand also will develop its own digital platform. By adopting this approach, Volkswagen will be moving closer to its customers on the one hand and developing new earnings potential with a comprehensive range of services on the other hand.

By 2025, Volkswagen expects to have about 80 million active users throughout the world. This would mean that the brand would have the leading digital ecosystem in the entire automotive industry. Volkswagen estimates that its sales revenue from services related to networked vehicles will reach about €1 billion per year by 2025 and expects a significant contribution to earnings from this business area.

                                      Turnaround for the regions

In North America, Volkswagen intends to evolve from a niche supplier into a relevant and profitable volume producer.

Diess said: "We will be significantly stepping up our activities in the USA. The main focus will be on the key segments in the country, large SUVs and limousines. In those segments, we will be strongly expanding our range. In a second stage, we will then take our new electric cars to North America. Over the next few years, we will be making considerable investments in electric infrastructure." Local production of MEB vehicles is to start from 2021.

However, Volkswagen diesel vehicles will not make a return to the US market after the emissions scandal is settled, the automaker’s passenger car chief Diess told German newspaper Handelsblatt.

“We are working under the assumption that we will no longer offer diesel vehicles in the United States,” said Diess. “The reason is the legal framework.”

Nitrogen oxide emissions standards are higher in the United States compared to Europe. Last year, Volkswagen admitted to installing software in diesel vehicles to cheat U.S. emissions standards.

The automaker subsequently has frozen diesel sales in the US, but Diess’ comments are the first time Volkswagen has said it plans to completely withdraw from the US diesel market.

In China, Volkswagen intends to strengthen the "top of volume" position it has already reached. This will be achieved by an SUV offensive and by rapidly launching electric vehicles. In China, Volkswagen also aims to benefit from the potential in the strongly growing economy segment. Work has already started on the development of appropriate models.

In other major markets such as India, South America and Russia, Volkswagen also intends to develop the economy segment.
COMMENT. Should Diess' comments be taken as an admission that Volkswagen cannot meet US emissions regulations? And how do his comments impact on Audi?