Closing factories will not be enough to save Volkswagen

https://www.economist.com/business/2024/09/05/repairing-vw-requires-huge-upheavals

by doener • 2 years ago

26 90 2 years ago

pfdietz8• 2 years ago

Developing software in particular has flummoxed VW.

This is reminding me of Motorola, or really any of the old cell phone companies that were blown away by Apple and smart phones. It was easier to get a company that was good at software to make phones, than it was to make a company that was good at phones to make software.

raverbashing• 2 years ago

Yup

Hardware engineers (most of them, anyway) make awful software developers.

They always get dregged on any slightly flexible process and higher level development.

sandworm101• 2 years ago

And when software engineers are allowed to built hardware, we end up using touchscreens to turn on our headlights. Whoever decided that we need an app to open our car doors was't a hardware engineer.

bluGill4• 2 years ago

I can design hardware - but as a programmer I know I'm not very good with it and avoid it. I know when I design something it will be subject to things I barely understand like RF and cross talk. I could get a EE degree (either formally or just by self study), but that would be a lot of work and so I think it is better to not do that. Hardware developers fail to understand they are not very good at software and they don't understand the mess they are making.

readthenotes12• 2 years ago

Apple may have produced a few pieces of popular hardware before they produce the iPhone.

I expect a more telling difference is whether the management of the successful company is overtaken by people who are better at political infighting than competing with other companies

repelsteeltje• 2 years ago

But wouldn't you agree that by the time of iPhone, Apple had had a fair share of political infighting and forgetting to compete with other companies too?

rzwitserloot2• 2 years ago

It keeps me busy, this kind of thinking. In a good way - something to mull over.

These massive companies that epically fail to adjust, is it primarily a management style (cliché representation: Private equity takeovers – focus on 'management is a job unto itself, I do not need to know much or care much about what this company actually produces', and perhaps as a consequence, cost cutting over care about the product, and considering the general opinion about your company and products as a 'brand thing that I do not need to care about; I have a marketing department for that who can fix this by tossing some ad euros at something')...

or is it more fundamental, that even with pretty good management, companies inevitably turn into a giant rusty smattering of cogs that generally keeps running but is nearly impossible to reconfigure? That we should e.g. study what Apple is doing with its odd corporate management structure: That it is _exceptional_ for a larger company to be able to pivot quickly regardless of market, circumstance, or management team?

Or is software development just uniquely difficult and therefore it is highly likely that a company that starts with a better-than-average grip on that and worse-than-average everything else still wins over a company that needs to 'buy in' to software?

Not enough data to really know, and the answer probably a convoluted mess of 'a little bit of everything'.

dzhiurgis3• 2 years ago

I’ve just rented a toyota and it’s comical. How people keep buying this???

Car is perfectly fine (despite being an anaemic ICE), but damn fix your UX.

People shit on Teslas touchscreen, but buttons on your Toyotas are worse - smaller, crowded and hard to discern.

Audio connectivity feels designed by lawyers who wish you to crash car as quickly as possible (thinking about this loud - maybe it’s a good thing, like the tullock spike?)

taneq• 2 years ago

The last Toyota rental I drove (think it was a ‘22 or so?) sure had a smaller, less ‘app-like’ touchscreen and a lot of physical buttons, but I could use those buttons while driving. I’m giving this one to the Toyota.

Edit: Your not meant to try and pair your phone while driving on any car.

lotsofpulp• 2 years ago

All cars I’ve rented in the last 5+ years have CarPlay/Android Auto, so it is all the same UX. Connect the phone via usb or Bluetooth, and I’m good to go. Can’t say that for Teslas.

beowulfey• 2 years ago

My 2019 Toyota has terrible UX. The higher end cars, particularly newer ones, are a little better (comparing Camry vs Corolla e.g.) but overall pretty bad.

Would love to hear people's opinions on car UX though. The Tesla is terrible too, as are most newer car brands. I haven't minded Hyundai cars, and I recently drove a new Nissan that was decent.

mattmaroon4• 2 years ago

I've got a Stellantis vehicle (admittedly, a higher trim one) and my girlfriend has a Model Y. I absolutely HATE driving the Model Y. Tesla's UX is far, far worse. The main thing I interact with in my car is CarPlay. Simple things CarPlay does well (making and receiving calls, providing directions, voice to text, playing music/podcasts, etc.) Tesla fails at and that's most of what a car UX is for these days.

I will literally never get a car without CarPlay. But even excepting that, Tesla's UI mostly sucks.

The answer to shitty buttons isn't shove it all 3 layers deep in a touch screen menu, it's better buttons.

nojvek• 2 years ago

Apple had iPod which was almost an iPhone already and they had decades of hardware and UX experience. They needed the cellular bits which they didn’t all build inhouse. Qualcomm is still the modem giant and Apple still uses them.

sunflowerfly• 2 years ago

This is true across many industries as well. For example, today’s SLR cameras have terrible software that is nearly impossible to change by anyone other than the manufacturer. I feel they should be a sensor and physical buttons with today’s phone hardware for brains. Let the user load custom software to control the hardware if they wish.

paulmd• 2 years ago

not only are they not going to do that, Sony’s android phones delete the firmware if you unlock the bootloader

foobarian2• 2 years ago

I wonder what plan B should be for the Western labor forces that are not competitive with 9-9-6 kind of labor. With transportation as cheap as it is, obviously the two sides must equalize one way or another.

aurareturn• 2 years ago

War & tariffs. That seems to be the way it's going.

mensetmanusman2• 2 years ago

996 is self-destructive.

The current events have more to do with the entire Chinese society (knowingly or unknowingly) being led by the CCP to massively subsidize their manufacturing far beyond demand curves at >10x the rate of the west.

Many of their industrial companies now only survive as jobs programs that would collapse if they were not being subsidized by the government.

This is a publicly acknowledged long term play that is starting to bear fruit.

1) Invite tech companies like VW to manufacture in China.

2) Set up government funded parallel factories to quickly clone the output.

3) Compete on price with a government backed supply chain.

4) Flood the zone and put global competitors out of business who don’t have the 10x subsidizes.

5) Reduce subsidies and be the last company standing.

Edit: Here is a department of treasury talk on this from July: https://www.cfr.org/event/us-china-economic-relations-jay-sh...

novaRom2• 2 years ago

This strategy is not unique to one particular country. Basically, it happens on different scales but repeatedly in the history (like Japan post-war).

otoburb• 2 years ago

>I wonder what plan B should be for the Western labor forces that are not competitive with 9-9-6 kind of labor

It's not really tongue-in-cheek to suggest that labour rights for other countries are being fought to emulate other Western labour forces that transitioned away from 9-9-6 to 9-5-5 (and maybe aspirationally eventually 10-3-4).

For example, there is a growing backlash in China around the "inevitability" of 9-9-6 resulting in more youth (still a tiny minority, but growing) opting out. As manufacturing and the 9-9-6 (or worse) schedule transitions to cheaper countries, the cycle will repeat.

cabirum2• 2 years ago

The western model is architected to exploit cheap labour from its colonies/vassals/"developing states". And to keep them from ever becoming developed. When these become unavailable, there is no plan B, you just go bankrupt and out of business.

_visgean2• 2 years ago

this article is literally about closing factories in GERMANY. So VW is definetely not "exploiting cheap labour from its colonies/vassals/".

lpcvoid2• 2 years ago

I disagree. Yes, the west had pretty terrible colonial past, but we are owning up to that. We introduced supply chain laws to remove child labor and extortion where possible. We have debates over closing factories because of human rights violations. Yes, there's black sheep, but in total the west is trying sincerely.

And then you have russia, which is basically the largest colonizer on the plant, and Saudi Arabia, North Korea, Syria, many African Countries... which are a gleaming example of human rights as we all know. Yet, you chose to pick on the group of countries which at least try?

I cannot understand your worldview.

bluGill4• 2 years ago

Automation - which western companies have been doing for years. The typical western factory makes just as much today as in 1950, but with 1/10th the number of humans. That automation is often not only cheaper (compared to western wages, not compared to Chinese wages!), but more accurate.

foobarian2• 2 years ago

That's a solution for handling the manufacturing/productivity side, though doesn't necessarily address the part of the labor force that may become redundant. Growth is always possible as long as a technological edge exists over the cheaper labor regions, but when that goes away it's down to UBI or (idealized) communist style redistribution. I don't know how compatible the market economies are with this kind of policy. Interesting times indeed

gedy• 2 years ago

Westerners wouldn't need as much noncompetitive wages if housing was cheaper.

mattmaroon4• 2 years ago

Tarrifs are the obvious solution and what we're doing. I expect to see a lot more of it. This is the one situation where economists would largely recommend them.

If you're afraid of a looming onslaught of cheap Chinese cars, just make 'em not cheap.

ExoticPearTree4• 2 years ago

But then again, you want to export to China as well, so they can make your products more expensive in retaliation by slapping tariffs on your exports.

blcknight• 2 years ago

Maybe their focus on costs is why their recent cars are terrible.

I've had a 22 Jetta as a loaner and it's the worst car I've driven in a long time. I've driven older jettas like 10-15 years ago and they were pretty sporty. This one's a boring sedan. The screen is so tiny. Its lane keeping is beyond useless.

We had to do a 6-hour road trip, and everyone agreed the seats are unbearable after about 2 hours.

elzbardico6• 2 years ago

Excessive enthusiasm with EVs were the spell of death for german auto manufacturers.

Then, the absurdly stupid sanctions on Russian Oil and Gas, coupled with the irrealistic and inconsequential energy transition and other absurdly emotionally charged decisions like phasing out nuclear power.

Germany industrial competitivity depended a lot on cheap Russian energy that could only be realistically replaced with Nuclear Energy.

Blaming volkswagen demise on incidental stuff like their issues with software is something that only someone as ignorant of the real world as a journalist from The Economist could do.

lpcvoid2• 2 years ago

Why do you think that nuclear energy, requiring Uranium, a resource that again has to be bought from another country (a lot of the supply comes from Autocracies), is the better alternative to renewable energies?

Edit: And moving away from russian energy is the best thing Germany did since the Berlin wall fell.

rswskg• 2 years ago

Until storage is solved (and it might not ever be), then nuclear is excellent for base load. Germany lacks coast line for wind and is in northern europe. Nuclear is ideal for them.

room42• 2 years ago

Germany could power their entire grid using only Organic, fair-trade, hand-picked, artisanal Uranium and still be far ahead of relying on fracked gas and petroleum.

Wind and Solar are great, but still require peaker plants to maintain 24x7x365 power. Grid-scale storage is coming along, but is still cost-prohibitive to do something like power the grid overnight from solar.

elzbardico6• 2 years ago

Because solar and wind renewables are intermitent, and the factual reality of energy prices and grid stability in every fucking place of earth that went all in into renewables trumps the all the wishful thinking of the the rent seeking renewable energy industry.

The reality nowadays is that for every single GW of renewable capacity generation you forcibly have to have another GW of dispatchable generation, usually natural gas, it is also inescapable that renewables, especially solar, displace baseload generation, reducing its ROI while not eliminating its fixed costs, making energy as a whole more expensive.

Most people have no fucking idea of how electric power generation and distribution and are easy to be mistified with bullshit accounting concepts such as LCOE. But what matter is the total SYSTEM-WIDE cost of energy.

And there is not a single place in the world where widespread adoption of intermitent non-dispatchable power sources haven't absurdly increased the final costs of electricity for the customers.

Of course, lots of people are making a lot of money out of that, a lot of talking heads have their careers based on that and they will say otherwise. So, just move to germany, california, UK or south Australia, enjoy your expensive electric bills, and stop worrying and learn to love increasingly frequent blackouts.

It is not that intermitent renewables are useless and can't be a part of the grid under some constraints. Also, if you have enough hydro-power potential, go ahead. But otherwise, unless you come up with a magic storage solution, solar and wind can't replace nuclear and thermal more than for a small percentage. And while we are at that, solar in a northern european country is a particularly dumb idea.

lightedman2• 2 years ago

Uranium is not required for nuclear energy. We have other elements that work, like thorium.

atemerev2• 2 years ago

absurdly stupid sanctions on Russian Oil and Gas,

do you want to enable people who wage aggressive wars or what?

elzbardico6• 2 years ago

Man, that's the kindergaten view of international relations and war. Really, that's not how the real world works and things have a lot more layers than this cheap naivety.

At the bare minimum, if the US can bomb and invade countries thousands of kilometers away from its borders due to their alleged security interests we should take into account the probability that Russia as a nation-state follows a similar logic when dealing with a country that borders them.

It is not like the US is some kind of exceptional entity that have some special rights to act in certain ways that are verboten for other countries.

pfdietz8• 2 years ago

I'm wondering how you're proposing to power cars with nuclear energy, if not electric cars? Are you proposing synfuels? These are very expensive. Hydrogen cars are notably for how much of a failure they've been, even in places like Japan that have been heavily pushing them.

hunglee22• 2 years ago

VW plan was to JV with a Chinese auto brand (or buy one outright), design & make in China, and then re-import them into Europe. The only way they could get price down for the consumer, at the quality level required to sell in Germany, is to leverage China supply chain and automated manufacturing advantages. VW EV built in Germany currently incurs significant loss per vehicle. This is part of the reason why German auto was so against EU tariffs - which basically scuppers this plan

cjrp• 2 years ago

Wouldn't the tariffs help them sell their own cars though? Collaborating with a Chinese manufacturer would only be required because the Chinese cars would undercut on price in the EU market. With tariffs, they won't.

hunglee22• 2 years ago

Germany made VW EV are already too expensive (and yet still make a loss per vehicle). Tariffs might give a short window - VW CFO has said 1-2 years - to get to the level where they can make cars profitably and affordable for the consumer. No chance of this

ianbooker2• 2 years ago

VW has Chinese joint ventures since decades. They already sell their "jv-EVs" in China, just not in Europe. I think in that regard, they are undecided wheter these products will meet brand standards in Germany.

VW as a brand went upmarket in the 2000s, with Skoda / Seat / jvs going for the meat. They became world class in repackaging and rebadging, and EoS helped a lot. That also made them kind of conservative in engineering, since everyting everywhere is super path dependent. You could find the same switch in a Seat Arosa and in a Bentley.

They are not trying to make a good EV, they try to replicate their ecosystem as a whole and that needs EoS above anything.

ExoticPearTree4• 2 years ago

I had no idea VW Group did so badly. On the other hand, the ID series... I don't even have words for how bad it looks on the outside and on the inside. And the pricing... very, very expensive.

Glancing through the article, it seems VW is doing the same mistakes as other corporations that are not software native: they see software development as an assembly line and think it works like an assembly line where you have an expected output rate.

emsign4• 2 years ago

VW had more profits 23 than in 22. It's their VW brand that is in trouble, Seat and Skoda are much more profitable.

ExoticPearTree4• 2 years ago

How come? All the cars are basically identical, just the logo is changed and they look a bit different on the outside.

dagw2• 2 years ago

On the other hand, the ID series... I don't even have words for how bad it looks

Really? While I'm not a huge fan of the ID 3 or 4, I think both the 5 and especially 7 look OK. Plus the Buzz is pretty cool. I agree that all their ID cars are too expensive though.

m_fayer• 2 years ago

I waited for the buzz with excitement. Then it came out and the details, and price were... an insult. Do they really want to restrict their consumer buyers to (questionably) fashion-forward rich hipsters?

How far from their roots they've wandered...

ExoticPearTree4• 2 years ago

I don't know, they seem very spartan and plasticky to me.

cosmicradiance• 2 years ago

China didn't look like a competitor until they were miles ahead.

"Appear weak when you are strong, and strong when you are weak" - Sun Tzu

redtriumph• 2 years ago

http://archive.today/fXG5O

lnsru• 2 years ago

I was absolute Volkswagen fan. The Audi Quattro was great. Diesel engines were a huge leap forward during Golf 4 times (20 years ago). 1.9 TDI was great, had that nice 96 kW version. Afterwards VW cut quality. Suspension in VW got worse than in Audi branded cars. The FSI engines came with timing chain problems. Then the big story with diesel defeat device and gasing apes. And then ID branded electric cars showed up and were obviously at least one generation behind competition. And every year the price jumped higher and higher and there was no improvements in quality or design. Current VW is a brand of boring expensive cars with average quality and very arrogant management. This is a perfect recipe to disappear.

jiehong• 2 years ago

That’s what a global market does: global competition from both Tesla and other imports.

Companies come and go: c’est la vie.

Yet, it might be too soon to write down VW.

novaRom2• 2 years ago

Is German Economy in a free fall at the moment?

Looks like many companies are in a "zombie state" unable to survive high interest rates, high inflation, and widespread job losses happen mostly among high-income individuals?

"Green idea" seems to have failed completely, and the long-term effects remain uncertain. Meanwhile, far-right and far-left parties are gaining momentum, that's scary!

ChrisArchitect• 2 years ago

An 'earthquake' at Volkswagen – and a crisis for Germany?

https://news.ycombinator.com/item?id=41473376

randerson• 2 years ago

Dear VW Group, please follow Tesla's example and eliminate your rent-seeking dealership network. Then you can reduce prices to a level that customers are willing to pay.

Closing factories will not be enough to save Volkswagen

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