VW to Reinvent Itself as a Maker of Smartphones on Wheels

To spur demand, the manufacturer is presenting updated versions of the VW Tiguan sport utility vehicle, Audi A4 sedan and Porsche 911 sports car at the Frankfurt show.

To spur demand, the manufacturer is presenting updated versions of the VW Tiguan sport utility vehicle, Audi A4 sedan and Porsche 911 sports car at the Frankfurt show.

Photographer: Chris Ratcliffe/Getty Images
  • Carmaker to add 20 electric cars, plug-in hybrids by 2020
  • New VW Tiguan SUV, Audi A4 set for Frankfurt show this week

Volkswagen AG, long associated with convenient cars for the masses, is positioning itself for an era when the automobile fulfills a bigger role than just moving people around.

Volkswagen is looking to enable its cars to send and receive data as well as drive on their own, the Wolfsburg, Germany-based company said in a statement Monday. The German manufacturer also plans to roll out 20 electric cars and plug-in hybrids by 2020, ranging from compacts to upscale sedans like the Phaeton, it said.

“We are in the process of reinventing Europe’s largest automaker,” Chief Executive Martin Winterkorn said ahead of the Frankfurt International Motor Show that starts this week. “By 2020, we will have transformed all of our new cars into smartphones on wheels.”

Pushed by potential threats from Apple Inc. and Google Inc. and the success of electric vehicles made by Tesla Motors Inc. in the U.S., German carmakers in particular are seeking to maintain their edge, developing fuel-efficient models that provide more media connectivity for the wired lifestyle of modern consumers.

New Era

The shift in direction comes at a sensitive time for Volkswagen. The company is grappling with a declining share of car deliveries in the U.S. and a sharp slowdown in China, its biggest market. That puts pressure on the company to boost sales in Europe to meet a goal of keeping 2015 deliveries steady with last year’s record 10.2 million vehicles.

Sales in the seven months through July fell 1 percent to 5.83 million autos, burdened by a 5.3 percent drop in China. To spur demand, the manufacturer is presenting updated versions of the VW Tiguan sport utility vehicle, Audi A4 sedan and Porsche 911 sports car at the Frankfurt show. (For more news from the industry event, see SHOW.)

Volkswagen expects the Chinese car market to recover, driven by demand in the less-developed western part of the country, Winterkorn said. To tap this potential, VW plans to roll out a budget model that will appeal to first-time buyers in that market.

China Push

“We are convinced that China will continue to grow -- surely no longer in two digits always, but it will continue to grow, particularly in the west,” Winterkorn said on Monday in an interview with Bloomberg Television. “We are getting ready for this.”

In addition to tense auto markets, VW is dealing with the after-effects of a power struggle that led to the resignation of Ferdinand Piech as chairman in April. Winterkorn, whom Piech tried and failed to oust, is planning to shift away from the company’s centralized decision-making structure, giving brand and regional managers more responsibility. The program is expected to be presented in the coming weeks.

The reorganization will allow Volkswagen to respond more quickly and propel growth, the CEO said in the interview. The new structure will also help to maintain jobs, as the company addresses the challenges posed by new competitors, he said.

Volkswagen’s new direction is exemplified by the Porsche Mission E and Audi E-tron Quattro concept cars. The electric-powered prototypes have a range of 500 kilometers (310 miles), the company said.

“Technological leadership is no longer solely defined in terms of horsepower and torque,” Winterkorn said.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE