Strategy

HOW CAN WE
SHAPE A CHANGING
WORLD? Essay

Our world is changing at a breathtaking pace. Globalization, new technologies and the Internet are the driving forces behind this change. Digitization is revolutionizing our lives in the same radical way as the Industrial Revolution did 200 years ago. Computers, smartphones and robots are redefining how we communicate, shop and spend our free time, and what our day-to-day life at the office and in the factory looks like. Digitization is, of course, also changing the way we shape our mobility.

“Urbanization means a need for intelligent new transportation concepts.”

The car has entered a new era: the shift in society’s values and strict CO2 laws around the world are the forces behind a trend towards increasingly economical drive systems, electric mobility, lightweight design and energy-efficient factories. Urbanization means a need for intelligent new transportation concepts. Constant growth in computing power, fast data networks and cheap memory are helping to keep people “always on”. Cars are becoming computers on wheels: engine and chassis management, driver assistance systems, navigation, communications, infotainment systems and automated driving are all developing at high speed.

But it’s not just the business environment that has undergone far-reaching transformation over the past few years: Volkswagen itself has changed fundamentally as well. Just compare the Group today with what it was in 2007: the number of brands has increased from eight to twelve and our workforce too has shown rapid growth. We now employ a quarter of a million more people than we did in 2007. Our sales revenue has almost doubled, to over €200 billion. Our operating profit has more than doubled. The number of production locations has risen from 48 to 118. And since 2007 we have added more than 180 models to our range. In sum, the Volkswagen Group has moved into new dimensions.

As I see it, our success is also founded in our ongoing willingness to regularly call our own approaches into question and then break new ground. In this way we have learned that our business is no longer just about technical aspects like horsepower and torque. We have learned that sustainability, environmental protection and social responsibility can be powerful value drivers. And we have learned to love electric drive – not just because it is so efficient, but also because it makes driving so much fun.

For current proof that today’s business models won’t automatically meet the needs of tomorrow’s world, consider digitization. Digital networking is radically changing not only our vehicles, our plants and our employees’ jobs but also our relationships with our customers. But we are ready for this change. In fact, our ambition is to be the engine that drives this change, and now we are stepping up the pace again. We are bringing the digital world to our vehicles and connecting in-vehicle sensors with our data centers. This way our vehicle fleet will become an intelligent swarm, providing us with a springboard from which to launch new mobility services. Real-time data is also needed for partially automated driving and intelligent traffic management in city centers or on motorways. Our factories too are in line for the next major automation step change. Fully networked manufacturing in line with Industry 4.0 is beginning to take shape. Machines are relieving our employees of monotonous, non-ergonomic tasks and boosting productivity. Robots are moving out of their protective cages and will work side by side or even hand in hand with people in the future. And in the sales sector the Internet has become the most important showroom. Now the focus is on seamlessly connecting the virtual, digital world with the real one. Using big data intelligently also allows us to develop new software solutions and service offerings for cars that give our customers genuine added value and open up additional business opportunities for our Company.

“Our ambition is to be the engine that’s driving change.”

So is this a brave new digital automotive world? There are, of course, fundamental questions that still need to be answered: will the factories of tomorrow be empty of people? Is the traffic infrastructure prepared for the opportunities the digital world has to offer? And how can we protect customer data from misuse? We are aware of our responsibilities and are addressing all of these issues carefully. At the same time, I urge you to look not just at the risks, but more particularly at the opportunities that digitization presents. Not only will driving become more comfortable and safer for people; at the same time, we will also reduce the impact on the environment through optimum utilization of our resources. Exciting opportunities for new technologies and business ideas are emerging for industry, and these can lead to growth and prosperity.

“We can and must bring the digital and the mobile worlds together.”

Above all, new trends and new technologies ultimately mean one thing: new business opportunities. But competition for future mobility is ruthless and success is never guaranteed, not least because the business environment in which we operate is tougher than ever. Consequently, politicians too need to be more fully aware of the scale of the challenges we face. Because the political framework is always a key factor in determining success or failure.

Despite all the challenges, I am convinced that we can and must bring the digital and the mobile worlds together. That is why digitization is one of the major components of our Group-wide “Future Tracks” program, which we launched in spring 2014.

On our road to the new digital world of mobility, there is one thing we cannot afford to neglect, and that is to ensure that people – our customers, partners and employees – can travel with us. Focus, safety and security, and trust – these values are and will remain the foundation for technological progress.

Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG