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With Skoda, VW group has teamed up with the right partner

Murali Gopalan | Updated on September 27, 2019 Published on September 27, 2019

Jurgen Stackmann, Member of the Board of Management, Volkswagen Passenger Cars

Jurgen Stackmann, Member of the Board of Management, says it is a win-win proposition for both brands

Jurgen Stackmann calls a spade a spade. For instance, he makes no bones about the fact that Volkswagen was pretty clueless in India and needed a helping hand to put things on track.

“It was a logical step forward to have Skoda lead the way. We have been in India for a while at VW; we love the country but did not understand how to make real progress. The Skoda team is a little more programmatic, solution-oriented, faster and understood what really matters,” says the Member of the Board of Management of the Volkswagen Passenger Cars brand.

The interview is happening at the Frankfurt Motor Show where Stackmann is hyper busy with his company’s new electrification vision plan and the ID.3 which is drawing huge crowds to the VW pavilion. It is a dramatic turnaround for a company which was down in the dumps four years ago following the diesel fudging scam which stunned the auto industry worldwide.

The new avatar

All that is clearly water under the bridge as the German carmaker gets ready to go flat out with electric mobility in the new decade. A whole lot of realignment has also happened in this new avatar which includes Skoda now leading the VW group for its India 2.0 story.

“We are in good hands with Skoda for India and it is a very, very strong team with decision-oriented strengths,” says Stackmann. He is also clear about the fact this was the absolutely correct decision “to put the future of the group in the hands of Skoda for India” where the VW brand will also benefit in a big way.

Bringing two teams together for a common goal is not the easiest of tasks and it is quite natural to have a clash of egos. Stackmann agrees but believes that eventually good decisions will prevail (over ego). By the end of the day, the key is to continue the story and “we as the VW brand trust the Skoda brand to take the lead”.

At one level, there was really no choice in the matter given that VW did try to do things on its own initially with little luck. Two years ago, there was a serious move to join hands with Tata Motors for a collaboration but this did not quite last the course and the two decided to call off their plans. As Stackmann says, VW could not quite get its hands around to getting the right formula for India.

The mood is distinctly more upbeat now with the Skoda alliance now attempting to put things back in place. “What I hear is extremely encouraging to have a strong leader in India from India and we will make good progress,” he says. The reference is to Gurpratap Boparai who has been entrusted with the responsibility of spearheading the new innings.

Stackmann is pragmatic enough to admit that India still remains a big challenge even while he laughingly adds that Mexico is perhaps even more aggressive as a market. “You have to be brutal on investments and get your costing act together in order to succeed in India,” he says.

The plan of ‘India for India’

This also explains why the plan of “India for India” and using exports on the side makes more business sense rather than merely laying a foundation for overseas shipments alone. “If you cannot make a future in India from India, just using it as an export hub is just not strong enough,” reiterates Stackmann. Simply put, this means that there is really no alternative to bringing down costs with large volumes in order to succeed.

“How to lay the foundation for two brands in one plant for a India project is the challenge and a top priority for the VW group. Anything going out of the country is an add-on and not the foundation of your business,” he continues. Eventually, it is about telling the team in charge “to make sense out of this plant for India” and then steer capacity to other places.

“If you rely on exports, you would be swinging with currency and with markets that could go belly-up. If you want to be sustainable in India, you have to make sense of India first,” says Stackmann. Needless to add, exports will be a part of the plan but the domestic market is clearly top priority.

The Skoda-VW alliance will have to pull out all the stops in order to get things right and get the attention of the fastidious Indian customer. It will not be a walk in the park for sure and the key is to be patient and hang in there.

Stackmann also acknowledges the volatility of the global automobile market where manufacturers are up against a host of new challenges. The US and China are in them midst of a bitter trade war while the threat of Brexit is looming large. Markets like Argentina have collapsed while China is facing a slowdown after years of frenetic growth.

“This is the new reality of the market and we need to see how the world changes. We must also be very vigilant,” cautions Stackmann even while reiterating that VW is ready to take on the challenge. For now, he is clearly “positive and satisfied” with the reactions coming through at the Motor Show on its electrification route with the ID:3.

“We do think we have a big opportunity now in our hands and have come a long way since 2015,” says Stackmann. This was the year of the diesel scam and “one of our worst moments” when the world of VW was threatening to fall apart.

Tough times call for tough decisions even while the the magnitude of the crisis was not quite clear yet. VW took “some very strong directional decisions” which included knocking off some of the programmes it had been working on prior to the crisis. There was really no alternative since it was important to send out the right message in terms of technology and a renewed mission for the brand.

As Stackmann recalls, this was the time the company decided to create the modular electric platform which was among the first big announcements made by the board way back in October 2015. And as much as it sounds cliched, it was quite a shock to the group because there was no technology in place for this vision plan.

During the weeks thereafter, VW began to execute its transformational strategy for 2025 and in incorporate some key elements. Core players within the brand were invited to work alongside on a new plan to improve productivity, strengthen the regions, reposition the brand, work on customer connect and, of course, an electric strategy.

The battery story followed and everyone first rejected the idea before they came onboard some months later. They realised that they could not continue with mixed platforms since they gave limited range as well as lesser potential for design and new cars.

Green drive

The next stop was the Paris Motor Show of 2016 where the electric concept was revealed and visitors got a glimpse of what VW was working on. The idea was to communicate the German automaker’s intent on electric and each of the cars showed at different shows are now part of the project.

Today, VW has committed itself to massive investments for this technology along with a new brand to take the story forward. As Stackmann says, there are already a sizeable number of VW cars on the planet which only reaffirms its role and responsibility in sustainability. Interestingly, the new logo was readied in just 60 minutes! According to him, it had to be changed to fit in with this new car/concept as the old one would not have done the trick.

“The brand is changing and we are displaying good confidence but with our feet firmly on the ground,” says Stackmann. The new change with a female voiceover for the commercial, a first in three decades, is also a noticeable change from the muscular messaging of not-so-long ago.

Yet, it is not as if the template will assure a smooth ride especially in today’s times. “The world around is changing so quickly and sometimes the pace is so fast that you almost cannot manage it. We are not a bunch of dreamers and it is a huge family at the group and brand level that is preparing for the future,” adds Stackmann.

By the end of the day, he continues, it is critical to make money in order to invest further and create a sustainable future for all stakeholders. For now, VW is “trying to find the balance” while striving towards a zero emissions footprint around the world.

“The key is to achieve that goal and yet leave behind a strong company for the next generation. We are convinced that taking this route consistently will make the brand desirable and outstanding for customers,” declares Stackmann.

Published on September 27, 2019
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