The global automotive industry is changing. The automakers are now forced to build greener cars and, in turn, the customers want more and more features onboard their vehicles. The coronavirus pandemic, Brexit, and chip shortage aren’t helping the situation, that’s for sure. However, the changing times create not only challenges but also opportunities - and Volkswagen already has an idea how to boost its profitability in the new normal.
VW’s sales and marketing boss Klaus Zellmer recently gave an interview to TopGear and discussed the manufacturer’s strategy for the next decade. He acknowledged over-the-air updates are a huge opportunity for automakers and painted a very different, though logical, picture of what the car buying experience could look like in the future.
Zellmer believes Volkswagen will begin producing cars with all the toys pre-installed, rather than having to tailor each car to the exact specification of every customer. This will make production cheaper and will, in the best-case scenario, mean the future vehicles should be more affordable for the clients.
In turn, to boost its own efficiency as a business entity, Volkswagen will lease you certain features only when you need them. Zellmer gave TopGear a very interesting example - leasing an autonomous driving tech. Yes, VW believes customers will be happy to pay for their cars to drive themselves. Per hour.
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“This is all based on profit and cost modeling,” Zellmer said. “If you take the example of Level 4 autonomous driving modes, the cost of installing that into a car is huge: a five-digit Euro figure. Who’s going to pay that? It’s not for the mass market. Now take the case that we install that and switch it on and off remotely. Our cost modeling says if we charge €7 an hour for Level 4 autonomous drive mode, this is a profitable business case.”
To put that into perspective for our American readers, €7 is about $8.4 at the current exchange rates. And yes, that’s per hour. Thoughts?