Stephan Wöllenstein: Lots of highlights in 2nd half of 2020 for VW

On July 17, Chinese people embraced the first day of sanfu, also called China's "dog days of summer", the hottest and dampest period of the year. However, the scorching sun outside does not seem to give a certain boost to the car market. In the first half of 2020, the sales of China's passenger car market fell by more than 22% year-on-year. This historical low has poured cold water on the auto industry in the hot summer.

The outbreak of COVID-19 at the beginning of the year was an objective factor, but the "retaliatory consumption" that was expected to appear later did not come as expected. The reason is not only that my country's automobile consumer market has transitioned from the incremental era to the inventory era, but also because the real money held in the hands of consumers and available for consumption has decreased.

Faced with this severe situation, how did Volkswagen, the world's largest auto group, perform in China in the first half of 2020? What are the changes and deployments in the short- and medium-term strategy? What is the future product plan? On these topics that consumers care about, the author had in-depth communication with Dr. Stephan Wöllenstein, a member of the board of directors of the Volkswagen brand and the CEO of Volkswagen Group (China).

Time: July 17, 2020 (Beijing time)

Location: Beijing

Interviewee: Dr. Stephan Wöllenstein, CEO of Volkswagen Group (China)

Volkswagen's performance in China in the first half of 2020

There is no doubt that 2020 is a special year. The performance in the first and second quarters of the first half of the year was completely different. The impact on the market in the first quarter was very obvious. In the second quarter, China's economy showed a "V-shaped" rebound, and the situation was much better, as did the Volkswagen brand. From the data point of view, the Volkswagen brand and its Jetta sub-brands delivered a total of 1,167,800 vehicles in China in the first half of 2020, and the market share of the main core brands and Jetta sub-brands increased by 0.7% year-on-year.

In the Chinese automobile market, SUV models account for 47% of the market, and Volkswagen brand SUV sales account for 30% to 32% of its total sales. There will be more new models in the future, and this proportion is expected to exceed 40%.

Jetta

Jetta is a brand new sub-brand of Volkswagen. At the beginning of its birth, this new brand is committed to becoming an automotive product that helps Chinese consumers enlighten their car life. Its slogan not only carries the confidence of the brand, but also shows Its determination. Its products are mainly compact family sedan and SUV models.

It has been launched in September 2019, and it has been less than a year. In the first half of this year, it has sold approximately 67,000 units, and its market share has reached 1% of the Chinese auto market. This has been quite successful for a new brand. According to statistics, 80% of Jetta customers are first-time car buyers, and many come from third- or fourth-tier cities. Dr. Stephan Wöllenstein said that these are the customer groups targeted by the Jetta brand. The Jetta brand is advertised and implemented in this way, and the positive feedback of consumers is naturally natural.

Product promotion plan

In addition to TAYRON X, which was launched on the evening of July 17, more SUV products will be launched in the future, which will be the focus of the Volkswagen brand. At the same time, in addition to updating the existing best-selling models, the 8th-generation Golf and new plug-in hybrid models will be launched in the second half of the year. In the next few years, we will continue to update existing mass-produced models and further enrich the product lineup.

The Volkswagen brand will unveil two ID. family models (ID.4) this year and launch many electric models from 2021 to 2022.

NEV product planning

Volkswagen is committed to achieving success in the new energy vehicle market and has a comprehensive electric vehicle development strategy. More than 40% of the 4 billion euro investment this year is in this field. In addition, the Volkswagen Group this year also increased its investment in Guoxuan High-tech, a Chinese manufacturer of electric vehicle batteries.

The Volkswagen MEB plant will soon launch the ID. series models. In October this year, the ID.4, the first domestically produced model of the ID. family, will debut in China. By 2023, the Volkswagen brand will launch 10 ID models based on the MEB platform.

The ID. family of the Volkswagen brand has a unique design language and a new concept, while also adopting a new sales concept. Volkswagen will provide a new charging experience and set a new benchmark around the ID. family. By the end of this year, it will set up such charging infrastructure in three super large cities in China to cope with the launch of the first batch of domestic ID. family models. . At the same time, it brings an integrated car experience, including charging, marketing, sales, products, purchases, services, etc.

Autonomous driving technology

This is an important area. Volkswagen hopes that there will be 2-3 L2 and L3 autonomous driving modes in 2023 to help consumers achieve autonomous driving in large cities. By then, the car may have been able to meet basic autonomous driving requirements, but it has not reached the highest level of L4 or L5 autonomous driving. At present, L5 is not easy to achieve, and there are still many obstacles to overcome. Considering the traffic situation in China, especially in large cities with traffic congestion problems like Beijing, self-driving vehicles will face huge challenges in avoiding all kinds of motor and non-motor vehicles through congested intersections. L4 and L5 cars must be safe before they can be launched.

The cooperation between Audi and Huawei and other partners is to launch self-driving vehicles that can communicate with the surrounding infrastructure in real time. At the same time, Volkswagen will cooperate more with Chinese technology companies and startups to jointly test autonomous driving. In the next three years, some autonomous driving functions will be rolled out to consumers.

Marketing transformation attempt

COVID-19 prevents users from going to dealer showrooms. While bringing pressure, it also wakes up traditional auto companies, including Volkswagen, that it is time to make changes. It seems that overnight, new ways and channels must be found to acquire customers, and the transformation needs to be completed overnight. These transformation measures will continue after the epidemic, and I hope that the next new product launch will be an "online + offline" model, that is, watching the press conference online + offline testing drive. With the launch of ID. family models, Volkswagen will have a new sales model, which will become more online.

Facing the current situation of declining consumption, how does Volkswagen adjust your strategy?

Speaking of adjustments, the Volkswagen brand performed better than the market as a whole in the first half of the year. This is of course a lucky thing.

Dr. Stephan Wöllenstein said, “The impact of COVID-19 is great. We also hope to return to normal. Now, some brands and some dealers in the entire industry have not fully recovered, including profitability. In the second half of the year, we will also make some adjustments, hoping to balance the external pressure on distributors and ensure the commercial and safe development of distributors."

Facing Generation Z consumers, how does Volkswagen plan in terms of product promotion and service?

Dr. Stephan Wöllenstein introduced that young consumers in China are very different from the past. For example, the same person’s consumption behavior is different when they are in their 20s and 30s. They may not buy a car in their twenties. Many times they bought their first car when they got married and started a family, and they were about to get married or have children. At that time, their consumption habits and lifestyle were different from before.

"Our generation may be like this: Although they are different when they are young, they will not change much from the people of the past when they mature. It may be the same with the Generation Zs, but it may not be the case. College students in their 20s have reached their 30s. Isn't it the same when you become a white-collar worker? We will also pay attention to the changes of young consumers in 5 to 6 years, pay attention to the way they communicate, pay attention to how they want to contact others. As a generation that has grown up in the digital age, they are more digital, and they want to communicate differently from their parents, and hope to exceed their expectations.

Therefore, we also need to adjust the communication methods and adjust the products to meet their expectations. Maybe ten years later, they are still a maverick generation, which is also worthy of our attention. "

Summary:

The one-hour communication meeting, although it is impossible to cover all the content of concern, but it can be considered as a full talk. On the same day, Volkswagen released a large amount of core information from the group level, brand level, and product level. Dr. Stephan Wöllenstein's one-day meeting was fully arranged. After the interview, I learned that the Volkswagen German factory is about to take a summer break. And, Dr. Stephan Wöllenstein will also return to Germany for a short break after finishing his work for the day. I believe that after the holiday, he will continue to lead Volkswagen China to provide us Chinese consumers with more opportunities and choices in this challenging market.

Dr. Stephan Wöllenstein and author