AIB Assignment: Case: 3

Volkswagen Group: Adapting in the age of AI

Q1. What is the landscape of today’s global automobile industry? How did the VW Group
develop in the industry over the years?
A1. Auto industry disruptions spanning from self-driving cars to electric hybrids; increasing
sales in the auto industry, were all impacted by Covid-19 as it deteriorated their sales
leading to dampening of auto-manufacturing. This was a stark contract when compared to
the earlier trends over the years. Many of the manufacturing stakeholders, exporters as
wells as the assembly manufacturing units had to be shut down due to lockdown in
countries known for Auto Industries. Due to the deteriorating economic conditions at a
global level, the demand witnesses a stark decline of 15-20% fall.
The legacy of Volkswagen group was centered around designing and manufacturing of
economical vehicles.
Over the years VW evolved the industry starting from its genesis in 1937 in Germany. During
1950s-60s the demand (local and abroad) went up and therefore the production surged.
From 1960s-70s VW led acquisition of auto-union GmbH and NSU for multi brand
development. In 1970s, VW expanded brands such as Polo, Passat. In 1980s, they tried to
venture into new brands and markets through acquisitions such s that of SEAT. In the 1990s,
they acquired Skoda and also established JV in China with other automobile manufacturers.
In 1990s, they acquired Bentley, Bugatti and Lamborghini. In 2000s, they expanded into
services markets such as insurance etc. By 2018, VW group owned 12 popular brands,
spanning across passenger vehicles, commercial automobiles with a total revenue of 236 bn
Euros.
Q2. What is the VW Group’s Together–Strategy 2025?
A2. The primary agenda of VW Group’s Together-Strategy 2025 was to make the group
more sustainable, efficient and customer centric, steadily moving towards generating a
sustainable growth. This was driven by the four primary pillars of :

 Transforming Core Businesses:

This revolved around an improved brand positioning, leveraging AI to develop self-
driving and autonomous vehicles. It will focus on model line improvements and
streamlining the tool kits.
It also focusses on developing new core competencies centered around the battery
technology, customer centric user features, and building strategic partnerships
 Mobility Business Solutions:
This pillar was focusses on establishing mobility solutions in businesses, developing
lucrative smart offerings in the same, offering more than 30 pure battery powered
automobiles with the expectation of sales, amounting to 2 to 3 million cars by 2025,
and expanding to electric-mobility
 Strengthening Innovation Power:
 This pillar revolved around establishing Industry 4.0 and driving digital disruption
though targeted R&D
 Secure Funding:
Improving operations, managing business portfolios and integrating strategies fell
under this.
Q3. What is AI? What role would AI be playing in the VW Group’s Together–Strategy 2025?
A3. According to a PwC report, AI can be defined as " a shared term for computing systems
which can sense their environment, assess, learn and act in response to what they are
sensing and their primary objectives." Applications of AI can be divided into 4 categories:
 Automated intelligence that focused on automation of task
 Assisted intelligence that help in work efficiency
 Augmented intelligence that supported decision making process
 Autonomous intelligence that makes decisions automatically
In line with Target-Strategy 2025, VW Group built research centers such as Data Lab, Munich
for targeted R&D and customer centric apps developed leveraging AI, ML and Data Science.
Not only for their products, VW also built AI systems to support internal systems to support
their staffs and employees working under other verticals thus adopting AI as an intrinsic part
of their everyday function.
Q4. If you were the lead of a business unit within the VW Group, how would you use AI to
help the company evolve its business toward the goals of Together–Strategy 2025?
A4. To follow through with the business goals of Target-Strategy 2025, at a lead position I
would try to focus my efforts on the following pillars to leverage AI at VW group:
 R&D: To drive more in-depth research especially in case of self-driving vehicles, AI
can be leveraged. Self-learning algorithms can be focused on for the same
 Manufacturing: AI enabled robots can help in manufacturing processes by speeding
and standardizing the process even more and reduce number of defects
 Cyber Security: To maintain all systems’ security online, AI can be used to ensure
cyber security
 Customer Service: AI can be used in chatbots to handle any or all customer
grievances
 Product Improvements: AI can be used to target many customer centric features
such as voice assistance, smart route assistance
Q5. What criteria should the VW Group use to assess and prioritize AI-themed initiatives?
A5. VW Group should use the following factors to assess and prioritize AI-themed initiatives:
 Develop of Proof of Concepts for autonomous vehicles
 Exploring and integrating various facets of AI in existing systems
 Introducing new smart features in existing modules targeting customer centricity
 Maintenance of IT infrastructure & Security