Tweak the business model in order to survive

Tweak the business model in order to survive

Tweak the business model in order to survive

Even scandal-plagued car companies need to plan for the future

Volkswagen is struggling, largely because of the emissions scandal, the results of which included numerous lawsuits and a massive hit to the company’s finances.

But the German automaker’s self-inflicted woes are not the only problems it must confront in the long term. The evolution of driving habits worldwide, especially due to ridesharing, means that all automobile manufacturers have to tweak the business model in order to survive.

The on-demand transportation service continues to heat up

Volkswagen has made a $300 million strategic investment in Gett (formerly GetTaxi), a global ride-hailing provider. This is Volkswagen’s first big bet on car sharing as a business. Volkswagen plans to use the investment to spearhead its own move into ride-sharing, on-demand transportation and autonomous cars.

Matthias Müller, chairman of the board of management of Volkswagen Aktiengesellschaft, framed the investment as:

Alongside our pioneering role in the automotive business, we aim to become one of the world’s leading mobility providers by 2025

Within the framework of our future Strategy 2025, the partnership with Gett marks the first milestone for the Volkswagen Group on the road to providing integrated mobility solutions that spotlight our customers and their mobility needs

Volkswagen is certainly not the only traditional car company stepping into the ride-hailing market. General Motors have invested $500 million in Lyft and announced a partnership to develop a fleet of self-driving cars. Toyota and Uber recently announced that they will explore a “ridesharing collaboration“.  Ford Motor Co. launched a mobility subsidiary to explore new ways to pave the company’s growth and has developed partnerships with Zipcar.

The new reality for automakers

More and more automakers realize that these sharing-economy companies are not necessarily competitors to their business models, but that their business models could actually complement each other.

The fact is that, for many consumers, driving is no longer seen as a privilege, but an annoyance and hassle. The world’s automobile manufacturers have to adapt, or they will become irrelevant as tech companies, including Google, enter what should no longer be called the auto industry, but must be described as the mobility sector instead.

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About The Author

Torben Rick

Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement, development and change management. International experience from management positions in Denmark, Germany, Switzerland and United Kingdom

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