Interview with Scott Keogh, CEO of Volkswagen Group of America
Electromobility offers the opportunity to restart the automotive market, says Scott Keogh, CEO of the Volkswagen Group of America. In this interview he talks about Volkswagen's core promise, the special features of the market and the great enthusiasm for an E-SUV.
For you as an American, what does Volkswagen stand for?
I guess there are two fronts, if you will. I think the first front has a lot of personal meaning to me. Like a lot of Americans, everyone has a story. So, my father went to West Point. My parents then went to Germany. My twin sisters were born in Germany. And of course, while being in Germany, they got to see a fair amount of Volkswagens. When they returned, they purchased a Volkswagen Beetle. I can remember quite well. We were a family of five kids. I was the youngest and my seat was in the back back. We'd call it the third row of an Atlas. So, it was the third row of the beetle. And I remember it vividly. I remember the sound, the smells, the vibrations, and the whole aura of the car.
The first vehicle I got to drive, the car I learned on was a Volkswagen Rabbit C with a manual transmission. So, I have many personal memories of Volkswagen. But what does Volkswagen stand for? I think the core of Volkswagen to me always has been first and foremost the people. It's always been the people's brand, which means it's accessible. It's available. It's approachable. And the fact that you could get great technology and great quality at this great approachable people's price. That's the core of Volkswagen.
You’re the first American CEO of Volkswagen Group of America in more than 25 years. What is specifically American that you bring to the table?
First and foremost, I have a lot of pride being in this position, getting a chance to represent this great brand yet represent it in a country that I love, obviously, and being an American. Still, you don't want to have a skill set that's just American. You want to bring your own skill set and your own contributions. And then, of course, where you come from is the added element. But in my mind, when people look at it, you always want a sense of permanence. There's an expression in English: Are you an owner or are you a renter? And when dealers look at it, when employees look at it, oftentimes if it's someone who's not American, they'll say, well, that person is renting. That person is not going to stay too long. This person is not putting down roots. And one of the important things for me is that people feel my appointment is something that has some roots and some establishment.
So it’s about stability?
Absolutely. I think the second thing is the culture. There is a mountain of cultural nuances. When you're asking dealers to invest millions of dollars, when you're asking employees to push further – how you navigate that is something that's very hard to understand if you're not from the country. I think the third and biggest point to me, honestly, is to hit the trends and there are a few simple things about the U.S. market that in the past, frankly, we missed.
What were these misses?
One thing about the US market is you have to be fanatical in cost. It's the biggest cost pressure environment there is. The second one is we've got to hit these major trends, things like SUVs. Yes, we're doing a good job of catching up but SUVs have been in the market now for nearly 30 years and we have to hit them faster. The other one, of course, is this sense of speed and urgency. A U.S. consumer sees something and says, “Can I have it tomorrow?” I think we've got to get a lot more speed. So, I think you've got to keep pushing and pushing and we will get there.
When you took over as CEO of Volkswagen Group of America you said: “This is a defining moment for Volkswagen and the industry.” Which developments in the industry did you have in mind?
Yes, it's a crucial moment, as I said. It's also a moment of great opportunity. I always look at it like at the beginning of a Formula One race. Everything happens at the beginning. And you can go from the fourth or fifth row to the first row at the snap of a finger. In the traditional car business, it basically comes down to scale. In the SUV segment, you are going in with seven, eight, nine competitors. It's hard to gain ground. But electrification gives us a unique chance. There are no 100-year-old electric car brands. There are no electric car nameplates that have been around for dozens of years.
This is a market reset and if you are a brand in our position, 2% market share, a relatively small player with a really strong parent looking after us – this is a chance for a reset. It gives us a chance to win. I think the second thing goes back to our very roots. The roots of Volkswagen in America are that we provide incredible transportation for the masses. We have that opportunity now with e-mobility, just as we did with the Beetle back in the 50s or 60s. For me, this is an exciting thing. So, I love the reset. I love the jump ball. And I love that we can bring electrified mobility to the masses.
What does an electric car definitely need to convince customers in the US?
It's quite clear. You need this great equation of range and price. So, we've been working hard and pushing executives with all the board members to make sure we get the range because at least starting out, that's what people want. If you don't have the right range and price, you're not in the game. I think we are getting there. It's fantastic. Once you clear that hurdle, then you just want to bring the magic of Volkswagen. Great design, innovation and technology. However, you've got to get over the first hurdle. Before customers are going to get in your showroom, get to the website – you have to get range and price right. I think we're there. And that's what excites me.
What would be helpful on a societal level to make the transformation to electric mobility happen?
This is a massive undertaking. When you look at it, decades of consumers have filled their car up with gas. 95% of Americans have never sat inside an electric vehicle. So, this is a breathtaking undertaking that we are talking about. When you have an undertaking like this, it is always important to simplify. In addition, when you simplify, the number one thing we need is one of the greatest – what I call trial experiments – that has ever taken place. We have to get people inside the cars to drive them. There are all sorts of myths that have built up. Can I drive it in the rain? Will it work in the rain? You know, this is the level of understanding that people have. So, we have been talking about EVs for ten, fifteen years now but with consumers, they are just arriving.
The second thing we have to do is, of course, build a belief system with the dealers. They are our representatives out there. And when I look at dealers, what do they want? They want an edge in the marketplace. They want a new business opportunity. We just got back from Chattanooga, Tennessee. We had 900 members of our dealer body in a room and we feel we are giving them that edge. There will not be ten competitors with an E-SUV like the ID. CROZZ¹ at this price point. So, the E-SUV is a chance for them to really attack the market. And once they believe that, then anything can happen.
How do you convince dealers that Volkswagen is well prepared to take this opportunity?
A good example is we recently showed dealers the upcoming E-SUV. We showed them the directional price of the car. We even showed them the monthly lease payment of the car. Dealers, they don't believe when they feel it. They believe it when they see it. Tangible things that you actually feel. And now that we've done that, the belief system is coming. And that's exactly what they want. They want a very competitive car that's going to give them an edge. And I believe we have it.
What are your plans for your production plant in Chattanooga, Tennessee over the next five to 10 years?
The first thing and the primary thing: We absolutely have to 100 percent utilize that plant properly. As you know, we started with the Passat and the segment absolutely collapsed. Good news is we added the Atlas² and the Atlas is off to a good start. We're going to add the Atlas Cross Sport³ and eventually, of course, we're going to add the EV there as well. But the primary thing and this will be a big test this year, we're going to make nearly 200,000 cars out of that plant. Production is going to double next year. So, we have got to get the utilization right.
The second thing: absolute stability. When you have different cars, volume going up, volume going down, the stability in the quality, stability in the audit scores. Once we have that, we can look to the future. And the future in my mind is, of course, we're going to build an electric car there. After that, we can look for a second vehicle on that platform. But first thing, get the plant utilized to drive the cost down. Second thing, stabilize quality, stabilize processes.
What role does Chattanooga play in Volkswagen’s worldwide strategy?
This is the hub of the American marketplace. It will feed us our most profitable car, the Atlas, and feed us our future dreams of electric vehicles. And that's what the plant needs to become. On top of that, obviously, we have a lot of the purchasing power down there. And of course, we have the alignment with local development and engineering. And I think it's pretty cool if you look at a place like Chattanooga, Tennessee, that had 12-13% unemployment when we entered there. Most of the work that was being done there was very menial, simple type of work. We are changing families. We are bringing new skills. We are bringing electrification to the region. This is powerful stuff. We're changing families and that's also the responsibility of a brand.
Why did you decide not to build the ID.3⁴ in Chattanooga but the production version of the ID. CROZZ¹ and the ID. SPACE VIZZION⁵?
To me, it's just simple, simple logic. If you look at the segment that the ID.34 competes in, let's call it the classic hatchback segment. In America, unfortunately, that's about 100,000 cars. If you look at what we're going to do with the E-SUV, that's four to five million cars. So look, we need to get the cars on the road. We need to show success. How do we come in with the ID.3 and say we're just testing it out? They would say small euro car, more of a compliance car. As opposed to an E-SUV, they're going to say, wow, that's in the heart of the market, in the heart of the segment, that's a real car! Let’s go! We want to throw a good first punch. We never want to throw a weak first punch because you might not get a chance to throw a second.
From the 60s on the Volkswagen microbus was an icon in the US. How do you feel bringing this legend back with the fully electric ID. BUZZ6?
I joined this position a little bit late, the car had already been shown. But I had about five to six experiences between dealers, customers and that car. And in my 25 years in the automotive business, I've never seen a reaction like that. It puts a smile on people's faces. It just changes the room. I haven't seen a vehicle do that before. And if you can imagine what that vehicle would be like on the road, what it would do for our brand, what it would do for our dealerships, what it would do for talk value? I think it's the coolest damn car I've seen in my career. And we've got to work on it. We've got to get it here. And that's what we intend to do. It could be a game changer.
1 ID. CROZZ: Study
2 Atlas: The vehicle is not offered for sale in Europe.
3 Atlas Cross Sport: The vehicle is not offered for sale in Europe.
4 ID. 3: The vehicle is not yet available for sale in Europe.
5 ID. SPACE VIZZION: Study
6 ID. BUZZ: Study