Mobility

"Higher Performance on Demand"

Interview: How Volkswagen Board Member Klaus Zellmer expects to fulfill drivers' wishes in the future. 

06/2021

Volkswagen AG
Klaus Zellmer, who holds a degree in economics, was born in 1967 and joined the Board of Management of the Volkswagen Passenger Cars brand with responsibility for Sales, Marketing and After Sales in September 2020. Before joining Volkswagen, he worked for Porsche for twenty-three years, most recently as President and CEO of the Porsche Cars North America subsidiary in Atlanta, Georgia.Volkswagen AG

Mr. Zellmer, in 2020 you joined the Board of Management of the Volkswagen Passenger Cars brand, where you are responsible for sales, marketing, and after sales. Did your appointment to the board coincide with a new era in which car manufacturers are having to make so many fundamental changes?

Klaus Zellmer: The shift to elec­tric mobil­i­ty is the biggest trans­for­ma­tion in Volkswagen’s his­to­ry. We want to become the most sought-after brand for sus­tain­able mobil­i­ty and the leader in bat­tery-pow­ered cars. The Way to Zero con­ven­tion is our road map for tak­ing com­pre­hen­sive social respon­si­bil­i­ty for pro­tect­ing the cli­mate. In par­al­lel to this, for some time now we’ve been going through a trans­for­ma­tion in how we use media. We’re putting enor­mous ener­gy into dig­i­tal­iz­ing our cus­tomer com­mu­ni­ca­tions. We want to pro­vide peo­ple with the right con­tent in the right place and at the right time. The right way to act in a dig­i­tal ecosys­tem is a major fac­tor in the suc­cess of our sales. In addi­tion, our busi­ness model 2.0 is address­ing new tar­get groups, mak­ing inno­v­a­tive offers, and stream­lin­ing access to indi­vid­ual means of mobil­i­ty. To add an impor­tant note right away, deal­er­ships are and will remain our inter­face with cus­tomers, and we are work­ing very close­ly togeth­er with them. For the vast major­i­ty of peo­ple, buy­ing a car is an emo­tion­al expe­ri­ence that can­not sim­ply be dig­i­tal­ized. Sen­so­ry and tac­tile aspects—touching and test-dri­ving the car—play a very impor­tant role.

Will Volkswagen customers still have the experience of personal car ownership? Or will efforts increasingly focus on providing access to the right vehicle at the right time for a specific purpose, for example with car-sharing models?

Zellmer: Yes, that’s pre­cise­ly the point. As men­tioned, we want to make access to indi­vid­ual mobil­i­ty even eas­i­er. So we’re offer­ing an entire range of options, from buy­ing or leas­ing cars to sub­scrip­tion and share-and-ride ser­vices. That’s enabling us to reach and delight many peo­ple who are not yet Volk­swa­gen cus­tomers. I’m con­vinced that this is a good instru­ment for build­ing loy­al­ty to the brand, as well as fos­ter­ing inter­est and plea­sure in elec­tric mobil­i­ty. I spent five years in charge of Porsche Cars North Amer­i­ca, where our expe­ri­ence with sub­scrip­tion mod­els was very pos­i­tive. Many of the sub­scribers had never set foot in a Porsche deal­er­ship before, but ended up buy­ing a car because we were able to inspire enthu­si­asm for the prod­uct in con­nec­tion with a sub­scrip­tion.

Volkswagen AG
Volkswagen AG

A strong brand needs a face. That's why we'll continue to want brick-and-mortar dealerships in the future.

Klaus Zellmer
Member of the Board of Management of the Volkswagen Passenger Cars brand with responsibility for Sales, Marketing and After Sales

Licensed dealerships have suffered under the Covid pandemic and the retail lockdown. Buyers have become more attuned not only to configuring new cars on websites, but also to ordering them online. What does that mean for dealerships? What will their future look like? What will their main activities consist of?

Zellmer: A strong brand needs a face. That’s why we’ll con­tin­ue to want brick-and-mor­tar deal­er­ships in the future. We need cus­tomer prox­im­i­ty and a local pres­ence. At the same time, a strong cus­tomer ori­en­ta­tion means tak­ing account of major changes in cus­tomer behav­ior. Our sales sys­tem will there­fore be avail­able to cus­tomers both online and offline, of course. That’s why we’ve been work­ing with deal­er­ships to build a dig­i­tal mar­ket­place for vehi­cles in stock, cus­tom-built, and used cars. This is of con­sid­er­able ben­e­fit to every­one involved, and we view it as a very impor­tant way of sup­port­ing e‑commerce. In con­crete terms: as of sum­mer 2021 we’ll have a mar­ket­place at vw.com, where deal­ers can post their stock of new and used cars on a trans-region­al basis—including online leas­ing and financ­ing with cred­it rat­ings. Cus­tomers can view a wide range of cars on offer and buy them from the deal­er­ships online. Here, too, we’re quick­ly work­ing to add online financ­ing and pay­ment options. We’re expect­ing this approach to help us reach a lot of new inter­net-savvy cus­tomers.

What role will dealership repair services play when electric drives start dominating the market?

Zellmer: First of all, we’re assum­ing that peo­ple will start dri­ving more as the pan­dem­ic comes to an end. There’ll be a back­log of repairs and main­te­nance pro­ce­dures that were post­poned dur­ing the lock­down. I also antic­i­pate a greater trend toward tak­ing vaca­tion trips by car. These and sim­i­lar changes in mobil­i­ty behav­ior will gen­er­ate new oppor­tu­ni­ties. Over the medi­um and long term it will be impor­tant to work with deal­er­ships to make even bet­ter use of exist­ing mar­ket con­di­tions.

How will the Volkswagen Passenger Cars brand redefine its customer journeys? What changes will you make in addressing customers?

Zellmer: All kinds of things are chang­ing there too, of course. User behav­ior had already been chang­ing sig­nif­i­cant­ly before the pan­dem­ic, but the lock­down had a tur­bocharg­ing effect on dig­i­tal mar­ket­ing. Cus­tomer dia­logues used to come to an end when cars were pur­chased. Today, we want and need to accom­pa­ny our cus­tomers beyond that point in time. That’s why we’re work­ing full steam ahead on shift­ing cus­tomer jour­neys from a lin­ear track to a closed cir­cuit, in order to tai­lor our offers even bet­ter to what they desire. Nine­ty-five per­cent of poten­tial buy­ers are now start­ing the process by vis­it­ing our web­site. That shows the over­whelm­ing impor­tance of an excel­lent online pres­ence. It’s where we tell almost all of our cus­tomers what Volk­swa­gen stands for, and what prod­ucts we and our deal­er­ships can offer.

And what is Volkswagen changing?

Zellmer: In order to help cus­tomers find what they’re look­ing for more quick­ly, we’ve con­sol­i­dat­ed all our online touch­points in a sin­gle place—OneHub. We’ve rolled it out at high speed in more than 100 mar­kets. Buy­ers enjoy a great cus­tomer expe­ri­ence and need just a few clicks to con­fig­ure their dream car. In con­trast to before, we now want to remain in dia­logue with cus­tomers after their deci­sion to buy or lease in order to offer not only tra­di­tion­al but also dig­i­tal ser­vices. For exam­ple, before they set off on vaca­tion we can offer Trav­el Assist or addi­tion­al bat­tery power on demand for long-dis­tance trav­el. We want and need to get these and other ben­e­fits across to our cus­tomers. Over the com­ing years we’re expect­ing these dig­i­tal aux­il­iary ser­vices over the entire vehi­cle life cycle to reach hun­dreds of mil­lions of euros in sales.

Volkswagen AG
Volkswagen AG

Future car generations will be produced with considerably fewer variants.

Klaus Zellmer
Member of the Board of Management of the Volkswagen Passenger Cars brand with responsibility for Sales, Marketing and After Sales

When you look at the future of mobility, what are the up-and-coming target groups you have in mind as potential customers? Are we talking about people born around the turn of the millennium? Many stories and books have been written about Generation Golf—will electric mobility now bring us Generation E?

Zellmer: With respect to tar­get groups, a recent study has incor­po­rat­ed fac­tors like the effects of the Covid-19 pan­dem­ic. One of the results of social dis­tanc­ing is that some of the con­sumers sur­veyed are now expect­ing to pur­chase their next cars ear­li­er than planned. That is espe­cial­ly true of the younger gen­er­a­tion. Around one-third of 18- to 34-year-olds list­ed social dis­tanc­ing as a major rea­son for plans to pur­chase their next car. That fig­ure drops to 22 per­cent for 35- to 54-year-olds. If you’re ask­ing about the type of drive sys­tem and whether the desire for elec­tric mobil­i­ty is a func­tion of age, then I’d say no, it’s more a func­tion of atti­tude. Many Gen­er­a­tion Golf mem­bers, for exam­ple, are buy­ing our ID.3.

The digitalized world has accustomed people to very short cycles of innovation. Expectations have risen. Technological advances are occurring ever more frequently. Cell phone technology becomes obsolete after only about two years. What does that mean for cars? How can Volkswagen keep up with this pace of innovation?

Zellmer: That’s a very impor­tant point, and we have an answer for this ques­tion too. Inte­grat­ing soft­ware into cars and into dig­i­tal cus­tomer expe­ri­ences is becom­ing one of the company’s core areas of exper­tise, and is guid­ing devel­op­ment toward a cus­tomer-cen­tric dig­i­tal ecosys­tem. The ID fam­i­ly is lead­ing the way here. Start­ing in sum­mer 2021 we’ll be the only large-scale man­u­fac­tur­er to be offer­ing over-the-air updates every 12 weeks for our ID fam­i­ly. That rep­re­sents an enor­mous advan­tage for users. Their cars will always remain cut­ting-edge, and cus­tomers can acti­vate the lat­est ser­vices on either a per­ma­nent or tem­po­rary basis. Updates will become the new nor­mal for cars as well—just like for cell phones and com­put­ers. Volk­swa­gen will be sub­stan­tial­ly reduc­ing com­plex­i­ty in struc­tur­ing these offers. Future car gen­er­a­tions will be pro­duced with con­sid­er­ably fewer vari­ants. Indi­vid­ual con­fig­u­ra­tion will no longer be defined by the hard­ware at the date of pur­chase. Cars will essen­tial­ly have every­thing on board already and cus­tomers will be able to acti­vate addi­tion­al func­tions on demand via the dig­i­tal ecosys­tem. That will sig­nif­i­cant­ly reduce com­plex­i­ty in pro­duc­tion. And then we’ll be ready for the next stage.

What do you mean by that?

Zellmer: Every­thing that Volk­swa­gen is plan­ning for the future will be avail­able to cus­tomers in a car for the first time in 2026. All the rel­e­vant fac­tors are con­verg­ing in our Trin­i­ty project. The car will set new stan­dards in three areas: tech­nol­o­gy, busi­ness model 2.0, and modes of pro­duc­tion. Right from the start, Trin­i­ty will offer auto­mat­ed dri­ving at level 2+ with the poten­tial for level 4. It will save time for our cus­tomers and make dri­ving less stress­ful. With cur­rent annu­al sales of around six mil­lion cars, we at Volk­swa­gen have the vol­ume you need to scale up sophis­ti­cat­ed autonomous dri­ving devel­op­ments and roll them out world­wide. We’ll be able to make them avail­able and afford­able for many peo­ple. Begin­ning with Trin­i­ty in 2026, we’ll also be guid­ing the Group in form­ing a neur­al net­work above and beyond the fully con­nect­ed vehi­cle fleet. More­over, future cars will be con­tin­u­al­ly exchang­ing data on things like traf­fic con­di­tions, delays, and acci­dents. Volk­swa­gen will be cre­at­ing a self-learn­ing sys­tem with mil­lions of cars that will ben­e­fit cus­tomers of all of the Group’s brands.

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