Volkswagen’s U.S. Strategist Is Optimistic About Automaking

Media coverage of the pandemic has had at least two profound effects on auto sales in the United States: depressing consumer confidence, but also enhancing Americans’ desire for personal transportation space that protects their safety and health.

Fortunately, Americans collectively seem to be shedding economic gloom rather quickly for now, translating into a strong snapback in U.S. new-vehicle sales. And because concerns about the virus seem destined to become a salient feature of life from here on out, consumers’ search for mobility “safe spaces” is likely to persist for years to come.

That’s how Reinhard Fischer sees things, anyway. And the views of the senior vice president of strategy for the Volkswagen Group in North America are important perspectives for how the U.S. auto industry addresses the emerging post-pandemic landscape.

“The U.S. auto market is on a very fast recovery space,” Fischer told Chief Executive. “That’s what we’re seeing in the market this year and also for next year. In 2021 we should be back to about 1.5 million units below what we forecast before the crisis as the total market; in 2022, a couple hundred thousand behind; and by 2024 back on track with before the crisis.” Americans have purchased about 17 million vehicles for each of the last five years.

Fischer said that American news media generally “have the purpose of projecting negativism [because] it sells their products. [But] we forget that back in February, before the virus hit, we were in a state of full employment in the United States, and companies were struggling to find quality people to support the growth in the economy that we’ve seen, specifically in the U.S. manufacturing sector.

“Of course, the numbers we see now are a disaster, but the key question is that there might be a difference between the press’s view and the actual economy. All of the people who work in our plant in Chattanooga [Tennessee] are coming back to their jobs. How much of this is a permanent situation that we have to live with higher unemployment?”

One hopeful sign in Fischer’s eyes, which also is being noticed by other automakers, is that now a motive for a significant number of new-car buyers is to purchase their own safe transportation space. “Some are coming into the market now who never thought about owning a car before but because of the virus, they have developed a severe distrust of public transportation and ride-sharing services.” In a car, “you can control your environment.”

In fact, Fischer and VW product developers already are pondering how to address this incipient factor by enhancing the germicidal properties of vehicles. “There could be product features we hadn’t thought about before, such as using more virus- and bacteria-resistant materials.” Ford has talked about a software tweak in some of its police vehicles that can raise the interior temperature to a high enough level for a long enough duration to kill many germs. “We’ll see more features like that,” Fischer said, “in reaction to what customers want.”

Another aspect of personal safety also could provide a medium- to long-term boost to U.S. auto sales, Fischer believes: the potential for growing dissatisfaction by many Americans with life in cities in the wake of the pandemic, which was worst in big cities, and urban unrest.

“We already saw the trend for people leaving the real mega-cities like New York and on the West Coast, which is a uniquely American trend; in the rest of the world, people are still going to cities,” Fischer said. “In the U.S., we’ve seen people moving away from cities and more into mid-size towns where the quality of life can be significantly higher. Now, when people reflect on what happened in [some cities], we’re going to see reinforcement of that trend.

“That also means more people will need transportation,” he said. “And that means a car.”