There must be a lack of oxygen at the top. In July, Toyota was unseated after an three-year reign as the world’s largest automaker, and it’s since released a “radical” new design for the Prius, and a patent for a flying car.
But it seems like its successor Volkswagen has wigged out after barely two months in the lead. On top of being embroiled in a corporate drama worthy of a daytime soap opera, the company has been hit especially hard by the financial crisis in China, where it’s experienced much of its incredible growth. So on top of introducing a host of new models at the Frankfurt Motor Show, brand chief Martin Winterkorn has also unveiled the company’s new plan for the future. In short, by 2020, Volkswagens will no longer be merely cars. They’ll be “smartphones on wheels.”
At a presentation on Monday, Winterkorn announced: “We are in the process of reinventing Europe’s largest automaker,” adding “By 2020, we will have transformed all of our new cars into smartphones on wheels.” In its ambitious plan, the company hopes to roll out 20 electric or hybrid models by the end of the decade, ranging from an entry-level world car to the range-topping Phaeton sedan, which could make a return to the U.S. market in 2018.
According to Automotive News, this unexpected shift is the result of two key points. The first being China, where the company has experienced a drop-off in sales since the financial crisis in July. The second is in response to the cultural shift and excitement over the potential of technically advanced, fully integrated models from Apple, Google, and Tesla. By aligning itself with the technical vanguard, Volkswagen is hoping to stay at the top for a long time. That’s all well and good, but does anyone really want a smartphone on wheels?
For years now, automakers have been talking about how the market is shifting, and how people now look at cars in the same way they do their phones. But that’s more than anything a generalization. Yes, with the rapid development of safety, connectivity, and infotainment systems, cars get more advanced by the year. But the average lifespan of a car is now over 10 years, and as cars keep getting better and safer, the used car market will continue to grow. Besides, the auto industry has used facelifts, new gadgets, and planned obsolescence to pressure car owners into trading into something new as long as the auto industry has been around.
Cars in the near future will have a host of connectivity features and autonomous tech that will communicate with cars on the road, integrate even better with people’s phones, and transform your car’s interior into more of a living space than ever before. But buyers won’t go for some hollow tech showcase. Unless its safe, affordable, fuel efficient, comfortable, stylish, and everything else a car has always needed to be, it won’t take off. For proof, look at Cadillac ELR sales.
Plus, Volkswagen has a lot of work to do if it wants to become a major player in the U.S., but trying to align itself with theoretical Apple and Google cars might not be the way to do it. At this point, the company’s image is more rooted in mid-market performance and luxury, than anything else. For starters, the company is woefully underrepresented in the SUV and Crossover markets. The 2017 Tiguan could go a long way on that front, but the company is probably better off developing a formidable lineup of people movers and soft-roaders before it goes all-in on EVs.
Additionally, a large portion of Volkswagen’s American fan base is enthusiasts, as its GTI and R-Line vehicles are what bring buyers into showrooms, and offerer a unique blend of performance and practicality. The company’s e-Golf has just gotten a price reduction, more standard features, and was instrumental in the Golf lineup winning the Motor Trend 2015 Car of the Year award. After putting the EV through its paces in New York City, our Eric Schaal said: “Easy to park and quick to jump past traffic with its compact frame and 199 pound-feet of torque, this little VW’s performance is city-friendly.”
It’s a fantastic starting point for the company to launch an EV line. But forsaking what works when they need it most for a Toyota Prius-like approach to EVs and Hybrids doesn’t seem like something the company can afford to do. Volkswagen may be bigger than Toyota worldwide now, but it still isn’t even close in the U.S. market.
The biggest reason behind Volkswagen’s decision to go all-in on tech could simply be politics. Volkswagen’s brand chief, Martin Winterkorn, is also the interim chairman of the Volkswagen Auto Group, which includes Porsche, Audi, Bentley, Bugatti, and Lamborghini, among others. Volkswagen may be the flagship brand, but former CEO Ferdinand Piëch, who was ousted in April, along with the Porsche board (Piëch is the grandson of Ferdinand Porsche, and many of his relatives hold power at VW) are calling for his removal as group chairman, and could force a vote on it as early as next week. This latest move could be a way for Winterkorn to assert his power on the global stage, and swing momentum to the flagship brand, potentially heading off any power grab by the board.
But in the end, there’s nothing wrong with Volkswagen committing to 20 hybrid and EV models. In fact, it’s a great thing. But as Volkswagen AG has already shown with the Porsche 918 and the XL1, new technology doesn’t need to be boring, and it certainly doesn’t need to be a smartphone to sell. Maybe it’s just the “smartphone” line that’s getting under our skin, but Volkswagen has spent the past 77 years as a trendsetter. With the company experiencing unparalleled success, why not just keep innovating and stop worrying about Apple?