"mass dilemma" issues three warnings
2024-09-07
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what happened to volkswagen, a brand that once enjoyed a high reputation among chinese consumers? after the news on september 2 that volkswagen might close its german factory for the first time in its 80-year history, many problems of this auto giant were exposed again, and it also sounded the alarm for the industry and policy circles. at present, "crisis" may be the keyword for volkswagen's survival, and to some extent, it is also a warning to the entire german manufacturing industry.
"the economic environment has become more severe, new players are entering europe, and germany, as a manufacturing base, is falling further behind in competitiveness." this is exactly the content of the statement issued by volkswagen group ceo oliver blume on the 2nd, which also aptly points out the two crises behind volkswagen's current predicament: the cost crisis and the competitiveness crisis.
volkswagen's cost crisis has been fully reflected in the numbers: in the first half of this year, although revenue increased by 1.6% year-on-year, operating profit fell by 11.4%. at the same time, global sales were about 4.35 million vehicles, slightly lower than the 4.37 million vehicles in the same period last year. sales have remained almost unchanged, but there is the embarrassment of "increased revenue but reduced profits", highlighting the seriousness of the cost problem. in fact, volkswagen executives have repeatedly warned about costs when sending tentative signals to the outside world. for example, at the earnings conference in august, blume emphasized: "the problem now is cost, cost, and cost."
▲on may 23, workers worked at volkswagen's wolfsburg headquarters factory. (reuters)
the "curse" of cost can be traced back to the high energy prices and the "backstab" of the united states since the outbreak of the russian-ukrainian conflict. since the outbreak of the russian-ukrainian conflict, the eu has followed the united states in imposing an embargo on russian energy and other measures, resulting in tight energy supply and increased inflationary pressure. the united states took the opportunity to export high-priced oil and gas to europe, further pushing up energy costs, which in turn had a huge impact on germany's energy-intensive industries such as automobile manufacturing, steel and chemicals. on the other hand, as germany has promoted large-scale energy transformation measures such as "reducing coal and withdrawing nuclear power" in recent years, the operating costs of the power system have increased and electricity prices have risen repeatedly.
rising costs and declining competitiveness are a pair of "twin brothers", but if the main market can be expanded and new growth points can be cultivated, there will still be opportunities to alleviate cost pressure. however, for volkswagen, both directions are facing "headwinds". take the chinese market, which accounts for more than 30% of volkswagen's sales, as an example. volkswagen ranked first with a market share of more than 50% in 2001, but it dropped sharply to 14% in 2023. at the same time, the proportion of chinese brands has increased significantly. in the field of electric vehicles, which volkswagen is betting on, it is far behind chinese brands. in germany, volkswagen has difficulty in boosting sales due to the continued weakness of the overall economy.
the dilemma is at hand, and three warnings are obvious.
the most typical feature of market competition is that all boats compete for the current, and those who "lie flat" will retreat. continuous r&d investment and optimization of product services are always the best way. the root cause of volkswagen's current competitiveness crisis is not that it has not made progress, but that it has failed to keep up with the faster development pace of its competitors. when evaluating the chinese electric car brands that emerged at the munich motor show last year, the german "daily" also had to admit that german manufacturers "are difficult to match chinese competitors in terms of battery performance, especially software."
it is worth mentioning that in the field of electric vehicles, there is also a phenomenon of "eastern learning spreading to the west". according to the wall street journal, "chinese manufacturers can launch high-performance, affordable and highly intelligent electric vehicles in one-third of the time of volkswagen", and in order to compete, volkswagen engineers are committed to "seeking experience and inspiration from the chinese auto industry."
secondly, volkswagen's problems are a concentrated reflection of germany's current manufacturing dilemma, and what is behind it is the importance of industrial policy. carsten brzeski, chief economist at ing bank, said that volkswagen's situation shows that germany's economic policy measures need to be significantly increased. it is worth noting that in recent years, more and more foreign media have begun to pay attention to the comparison of industrial policies between china and europe and the united states, exploring the code of "china's rise and the decline of the west". for example, an article on the website of the new york times stated that china strongly supports key manufacturing industries such as clean energy manufacturing, and its industrial dominance is supported by decades of experience, "this experience is to mobilize all means and encourage private enterprises to compete fiercely."
finally, the result of trade protectionism is to protect "backwardness" and will never produce strong competitiveness. when talking about the transformation dilemma of volkswagen and other european and american auto giants, there are always western media and politicians with ulterior motives who use china as an excuse to advocate isolating chinese competitors by imposing tariffs. in fact, even german automakers themselves know that this kind of noise that obviously goes against economic common sense will not work. "isolating" competitors will not disrupt the pace of progress of opponents, but will instead lock themselves in a comfort zone far away from innovation. as ola källenius, chairman of the board of directors of mercedes-benz group ag, warned: in the long run, competition from china will help european automakers produce better cars. "an open industrial environment can make the pie bigger together, but protectionism will hinder this."
