Volkswagen Group on Recovery Path in S. Korea After ‘Dieselgate’

SEOUL, Dec. 6 (Korea Bizwire) — Volkswagen Group Korea (VWGK) is firmly on the recovery path as it has focused on reviving sales and regaining consumer confidence, which was hurt by the company’s diesel emissions scandal in 2015, the group’s managing director has said.

In South Korea, the German carmaker voluntarily stopped selling its vehicles in July 2016 and resumed sales in early 2018. Sales remained weak in the following years but recently began to perk up due to new models and its “stabilization” efforts.

This year, the company changed its name from Audi Volkswagen Korea into VWGK in line with its parent Volkswagen Group’s worldwide strategy to consolidate the group’s brands in countries into which it has advanced.

The name change is aimed at enhancing synergy and efficiency among its brands launched in Korea. VWGK’s role is not to interfere with the brands’ operations but to establish a solid business structure together.

Volkswagen Group carries seven out of its 10 brands in Korea — four under its wing and three independently. The four brands are Audi, Volkswagen, Bentley and Lamborghini, and the three are Porsche, Ducati, and Volkswagen Commercial Vehicles.

The SKODA, CUPRA, and SEAT brands are not available in Asia’s fourth-biggest economy.

“Seven brands (are) operating here. This tells a lot of significance on the market. Korea is an important market for us, there’s a high relevance and this is why I do see it positively what’s coming (in the) next months and here, for us, we are also introducing latest models that we have,” VWGK’s Group Managing Director Till Scheer told Yonhap News Agency in a recent interview.

He did not elaborate on the number of upcoming models in 2023 and their projected time frames.

“Since 2018 and now, of course, we have COVID-19 and we have the shortage in supplies but I have to say we are doing better and we have introduced 23 all-new models (under the four brands) in 2022 (following 22 new models last year),” he said.

The models include Volkswagen’s ID.4 SUV and Audi’s Q4 e-tron 40 SUV, both equipped with the parent’s EV-dedicated platform MEB, and Lamborghini’s Urus S sports car.

In September, the Volkswagen ID.4 made its first debut outside of Europe in Korea, which the group sees as “essential” for its e-mobility business.

The Q4 e-tron 40 is aimed at gaining a share in the burgeoning local EV market. Lamborghini launched the Urus S in Korea last month for the first time not only in Asia but worldwide.

In the coming year, Scheer said the company plans to bring more EV models to Korea to benefit from the country’s advanced charging infrastructure and local consumers’ growing appetite for zero-emission cars.

“Infrastructure is good also on fast charger here and the government is doing a lot of efforts here. Of course, we will do our share to work together with others in order to be able to have infrastructures,” he said.

On the era of EVs, the executive said he has full confidence, saying an EV needs to have a price that is close to an internal combustion engine (ICE) car and needs to be charged in the same time as the driver can fill it up, and the range also needs to be similar to it.

Under the New Auto strategy, Volkswagen Group plans to launch 50 EV models globally by 2030 and raise the portion of EVs to 50 percent out of its overall lineup.

In that vein, VWGK has lowered the portion of diesel cars from 48 percent for the whole of last year to 31 percent in Korea as of October of this year with the introduction of gasoline engines and battery electric vehicles (BEVs).

The ratio of BEVs more than doubled to 9 percent from 4 percent during the cited period.

All the reorganization efforts appear to be paying off following “dieselgate” in which Volkswagen Group used special software to dupe official emissions tests, reportedly costing the company more than 32 billion euros (US$34 billion) in vehicle refits, fines and legal costs.

“Now we are in the phase of stabilizing and I am very positive that we are on the right way to get back to a good point in terms of business and to be able to have a solid foundation whatever comes for the future that we can keep this business,” he said.

Volkswagen vehicle sales more than doubled to 1,943 units in November from 910 a year earlier, with Porsche sales also more than doubling to 963 from 444 and Lamborghini sales soaring to 45 from six during the same period, according to the Korea Automobile Importers and Distributors Association.

For the whole of 2022, Scheer expected annual sales of VWGK’s four brands will be at a similar level of last year when it sold a total of 40,838 units.

In the January-November period, the four brands reported combined sales of 32,976 units here, 7 percent lower than 35,493 units a year earlier.

Asked about the timing of a turnaround, he said the company should be able to make a profit as early as the second half of next year if normal market conditions come back.

“Now the market sentiment is weak at this point of time as there are factors for this. Inflation and interest rates are going up and finance through the market is not the best,” he said.

VWGK’s operating losses widened to 63.9 billion won in 2021 from 19.1 billion won a year earlier on increased marketing costs. This year, however, it is expected to come up with an improved operating figure helped by improved sales.

Looking ahead, he hoped the overall situation, including the Russia-Ukraine war, lack of chip supplies and the prolonged pandemic, will improve next year.

Scheer joined Volkswagen Group in 2003 as director of the light commercial vehicle and fleet sales in Italy. He has been involved in Asian businesses since 2008, when he took over as managing director of Volkswagen Hong Kong Ltd.

(Yonhap)