VW pumps US$4bn into digital as it eyes sales revenue in the billions

Volkswagen has set aside US$4 billion to invest on digitalisation by 2025 as "intends to generate sales revenue running into billions from digital offerings and services". With its “Transform 2025+” strategy, the brand launched the biggest change process in its history. By 2025, Volkswagen intends to play a leading role in the new automobile industry, set up innovative mobility solutions and become the world market leader in e-mobility.

The focus is on the evolution from an automaker to a mobility service provider with a connected fleet. Meanwhile, 2020 will therefore be a turning point for the Volkswagen brand. While today, some 1.5 million vehicles with no online access can already connect with the internet with the “Volkswagen Connect” retrofit solution. 2020 will be the year when Volkswagen begins connecting its entire fleet. Each year, over five million new vehicles will then become part of the Internet of Things.

Volkswagen has also realigned its sales model to keep the ecosystem as open and accessible as possible. For the first time, the new dealer contracts allow Volkswagen to engage direct with customers over the vehicle’s entire life cycle. Customers can thus receive tailor-made offers without having to make an appointment with a workshop.

In a bid to transform from an automaker to a mobility service provider, the brand aims to speed up its ecosystem with its own software and with the help of external partners. The ecosystem will be primarily cloud-based called ‘One Digital Platform’ (ODP). The platform will bridge the connection between cars, customers and services.

As part of the development, the automobile will be redesigned with the new IT architecture software known as “vw.OS”, as it fits the fleet of electric car models from 2020. Michael Jost, chief strategy officer of the Volkswagen Brand and head of group strategy product said this to be “the next level on the road to autonomous driving”.

“Volkswagen is spearheading the development of the OPD in collaboration with the Group brands and we are seeking additional external support,” Christoph Hartung, head of digital and new business / mobility services at the Volkswagen brand, said, adding that partnerships and cooperation projects will roll out soon.

Earlier in the year, Volkswagen appointed  brand chief Herbert Diess (pictured) as CEO and chairman, replacing Matthias Müller, who took on the role in 2015. According to the chairman of the Volkswagen Supervisory Board, Hans Dieter Pötsch, Diess demonstrated speed and vigor in “radical transformation processes”.

“This accomplishment makes him predestined to fully implement our strategy 2025 in the decisive years that are now to follow,” Pötsch said. Volkswagen’s TRANSFORM 2025+ programme was created two years ago to focus on clearer brand positioning across the various regions and segments.