Volkswagen Plans To Shift From Selling Cars To Offering ‘Vehicles On Demand’ – And Grabbing Even More Data About Drivers
Volkswagen Financial Services (VWFS) is a wholly-owned subsidiary of the well-known car manufacturer Volkswagen (VW). An article in the German Auto Motor und Sport magazine reports on a major shift in the way that VWFS, and hence VW, wants to operate (all translations by DeepL):
Volkswagen Financial Services (VWFS) is planning to introduce a new mobility platform in 2025 that will push traditional vehicle sales into the background.
Instead, the use of vehicles, summarised under the term ‘Vehicle on Demand’, will come to the fore, according to a report in ‘Automobilwoche’. This platform, which is to be launched in the relevant markets in the first quarter of 2025 as the successor to the Europcar app, marks a significant change in Volkswagen’s business model.
The CEO of VWFS, Christian Dahlheim, explained:
In future, customers will be able to use the [new] app to take advantage of various mobility offers such as leasing, rental, subscriptions or car sharing. Volkswagen will not provide all offers itself, but will work together with strategic partners, particularly in the area of car sharing.
Because VW will retain ownership over the entire life of the vehicles, it will be able to gather even more data about them and the people who drive them:
Another advantage of this strategy is the comprehensive access to data, both about the vehicles and about the customers. Volkswagen currently collects data on around eight million vehicles, and this figure will continue to rise in the future. This data enables VWFS to determine the optimal marketing channel for returned vehicles – be it remarketing as a leasing vehicle, a subscription, use in car sharing or sale as a used car.
The opportunity to sell many more used cars is an important aspect of the shift to Vehicles on Demand. According to Auto Motor und Sport, VW sold 142,000 used cars in 2020, expects to sell 462,000 this year, and hopes that will rise to a million vehicles in the future. With the new business model, VW wants to become one of the world’s largest used car dealers. Perhaps inevitably, AI will be applied to the data gathered about each vehicle, particularly in order to carry out “automated residual value forecasting”. According to Dahlheim:
The [new] platform should make it possible to optimise prices and residual values, taking into account capacities, logistics costs and market differences within Europe. This opens up new opportunities to market vehicles in different markets depending on demand and thus optimise price leverage.
It’s rather ironic that a company originally tasked by Hitler to produce an affordable vehicle that every German family would be able to buy (hence the name “Volkswagen” –– “People’s Car”) wants to shift to a business model where nobody buys one.