Volkswagen Preps for Changing World
March 27, 2022
Volkswagen has been able to capitalize over the years from globalization. This ability has been hurt by recent global events such as the covid-19 pandemic, semiconductor shortages, and the Russian invasion of Ukraine. Now VW is looking to make moves to secure access to components and raw materials as well as make production less dependent on suppliers across the globe.
Much of VW's business over the years has been international. This focus has allowed Volkswagen to become the second-largest car manufacturer in the world. As recent events have hindered VW's production, which fell 18% from 2020 to 2021, the fragility of global supply chains was brought to light. To account for VW is now prioritizing uninterrupted part supply over seeking the cheapest possible parts. The rationale behind this decision as stated by Murat Askel, VW's purchasing chief, is "my priority is securing supply. Without components, you can't build cars,".
In addition to reinforcing supply, VW is also putting more investment into the European market and American market to account for its growing dependence on the Chinese market. VW's goal is to increase investment in electric vehicles in the United States in order to at least double its share of the US market.
Volkswagen is trying to adapt to the current realities of the world and continue the success the company has had. Although VW sees Europe and the United States as keys to its future it also wants to continue the success it currently has in China. As the world changes it is important for VW to adapt to it.
Source: (The Wall Street Journal: "Volkswagen Prepares for a Deglobalized World" by William Boston)