The new CEO of Volkswagen said Tuesday that the company has no plans yet to go it alone in China, but he sees investment opportunities afoot as Asia’s largest economy prepares to open up its market to automakers.
“The car industry is not only 50-50 joint ventures,” Herbert Diess told CNBC’s Nancy Hungerford at Auto China 2018 in Beijing, adding that the world’s largest automaker was open to new partnerships.
“We need to partner with the local tech enterprises. There is a lot to do, but there might be one or other investment opportunities. Investment is always an option,” said Diess.
China announced last week that it would open up the market to foreign automakers, which have been encumbered by ownership limitations in the country for more than two decades.
The restrictions, which prevented foreign car makers from owning more than a 50 percent share of any local venture, will be lifted incrementally over the next four years. Manufacturers of fully electric and plug-in hybrid vehicles will be the first to benefit, starting this year, followed by makers of commercial vehicles in 2020 and the wider car market by 2022.
The move is part of China’s efforts to make its domestic autos industry more flexible and establish itself as a leader in electric cars.
Diess dubbed the policy shift as a “positive move forward” that would generate further growth and investment in China.
His comments came in the first sit-down interview since he was appointed as head of the German automaker on April 12, 2018. He will assume the role from August 2018.
His appointment coincided with a string of announcements from the car company, including plans to organize its business into six divisions, while creating a separate portfolio for China, in a bid to decentralize responsibility.
“From our side, we are really set up very nicely in here in China,” Diess told CNBC.
“I think we are so strong because we have strong joint venture partners, and China’s very specific so I don’t think alone we’d be as strong as we are.”
“For the moment we don’t have any plans to change that structure.”
Diess takes over from ousted CEO Matthias Müller, who stepped in to lead Volkswagen in the wake of the company’s 2015 emissions scandal. However, the new CEO said that public mistrust continues to hamper the business and it would be more time still before its reputation fully recovers.
“We have lost so much trust with some of our customers that it will require a few more years before we can say that we’ve left diesel behind,” Diess said of the scandal.
“The company still requires a lot of change,” he said, adding that Volkswagen was consulting with advisors to “future proof” the company.
“Still, (there are) many months to go through until we can say bye-bye diesel.”