Interview – Cian O’Brien, UK Director of Volkswagen Commercial Vehicles
“Government incentives, be it through tax reductions or threshold emissions levels, are important. Over the next five years in particular the focus will need to be extremely strong.”
Volkswagen Commercial Vehicles’ UK Director Cian O’Brien has enjoyed a 22-year career in the automotive industry, holding senior roles at Audi in the UK and US and Seat Ireland.
Now, he leads a team responsible for around 45,000 van, pick-up and campervan sales per year. Here he outlines the importance of the sector to Volkswagen Group, talks about the pressures of the chip shortage and keeping customers happy, explains why even co-developed vans will retain all the hallmarks of his brand and looks to the future of electrified and autonomous vehicles.
What led you to commercial vehicles?
“I was initially excited because it’s an evolving and booming market, mature but with huge potential. It’s exciting for Volkswagen in particular because of the impetus and focus on our future products, including some of the electric ones in the ID family.
“Then I delved deeper; on one hand there’s true business users, many of them fleets, who expect a different level of service so they can be kept mobile at all times. For them, time is money, and that brings in some really interesting dynamics.
“Plus, there’s the passion that our customers have for our products. It’s not a simple parallel, but there are comparisons with Audi for brand appeal, particularly for our lifestyle customers. You won’t meet a more passionate customer than a California buyer for any brand, possibly even outside of automotive.”
Where do commercial vehicles sit in VW’s hierarchy?
“It’s significant. On average we produce around half a million units a year, and the UK is the largest export market, selling around 45,000 units in a normal year. We are a premium product in this space, and so are second [to Ford] in terms of market share.
“It’s also complex because there’s a high level of conversion and specialisation, which is also quite a large part of our business. There’s also the lifestyle vehicles, which have had an extra focus on them during the pandemic and the staycation boom, which looks set to persist as people reassess their options. Then there’s the passenger vehicle offerings, starting with Multivan, which is an exciting redesign and offers something different in the market, in terms of load carrying capacity and passenger capacity.
“Finally, we have an eye on the future, in terms of the ID family and the excitement building around the launch of ID. Buzz and its commercial variant, the ID. Buzz Cargo. Electrification offers us lots of exciting opportunities that we’re embracing.”
How has the market been during the pandemic?
“The challenges are well documented and I guess everyone went through that. But it did create some opportunities; think about the shift to the gig economy, or the last-mile delivery boom. Now we’re thinking about those opportunities on a more strategic level, offering things like dealer-based rental programs to offer flexibility for those that need mobility on an ad hoc basis. We see opportunity for that now and in the future.
“Then there’s the leisure market, which we’ve talked about. Demand is exceptionally high, but, like the rest of the industry, we’re constrained by the semiconductor restrictions and that presents its own challenges. Our focus has to be on communicating very clearly and carefully with customers. It’s difficult but, with a lot of dialogue, customers are mostly understanding.”
Presumably used vans are also as in demand as used cars?
“Yes. There’s reduced stock and increased prices, so again we have to be extra focused on helping customers. Our Van Centres are working tirelessly to support them and do everything they can to get the limited supply to the people that want to buy it, and to provide more flexible terms, for example on finance contracts, to help them while stock of new and used vans is tight.”
You’ve talked about electrification: where are you at, and where are you heading?
“So, we launched the ABT e-Transporter in September 2020. The response has been very positive, both in terms of customer satisfaction and in terms of learnings. The range – at 82 miles – is not at the high end of the scale. For some it is enough, especially with its fast-charging capability, and the vehicle works well – so much so that we’ve actually increased our order allocation for this year. That’s a very positive start.
“Then there’s the learnings, which align with what we’ve seen with passenger vehicles. One of our biggest learnings has been that customers need time to experience the vehicle, to work out if it fits their needs. There needs to be a detailed assessment of charging infrastructure and what’s available to them, and a period of understanding of what they need from the vehicle. We’re looking at providing subsidised access to an electric passenger vehicle as part of a package, too, for instance.
“So it’s been a good exercise for us and good preparation for the future products that we’ve got coming in ID. Buzz and ID. Buzz Cargo. And something that, again, we’re taking learnings from.
You mention ID. Buzz. That surely has the possibility of being a landmark EV launch?
“It’s going to be special. It harks back to an iconic vehicle in the T1 Transporter, and the excitement around it has been building for a while; it evokes a lot of memories, while also being very forward-looking and modern. In that respect it is quite unique, and with that styling it really stands out.
“It also delivers by having more than 250 miles of range. That means it’s capable of pretty much any normal activity; it’s right in the sweet spot in that regard. And then there’s the layout – there are some pretty smart features to make it usable we’re excited about – and the tech, which adds a layer of smartness and intelligence.
“That makes us excited; it’s in a new space but draws on an area where we have a lot of customers. It feels like everyone – internally, the media, customers – is an advocate. We’ve got an opportunity to open a new market. The potential is clear – not just for it, but for the whole Buzz family we have planned.
Do you see all vans being electrified in time?
“Yes, but the timeline comes back to usability. In a vehicle the size of ID. Buzz, absolutely. Battery weight is a factor but we’ve found the right way to make it work. A range of 250 miles is enough for regular, medium to long distance use.
“But we want market progression too. Today, around 3% of CV registrations are electrified. Yes, supply is impacting that, but we need a much broader audience than we have today, and some of that will be down to us producing the right vehicles. ID. Buzz will unlock some of that potential – it has the power to capture the imagination, but obviously it can’t stop there.”
Will hydrogen play a role?
“We’re not ignoring it by any means, but as part of the global Volkswagen Group, battery-electric is our current chosen route and feels a much more viable option for us – not only in the light commercial vehicle space, but also in passenger variants of larger sizes. From the point of view of ability and usability, coupled with the charging infrastructure that’s in development, electric vehicles for us are what we see as the sensible and deliverable bedrock of the mobility solutions for the future.”
Some customers are concerned by the timeline to stop selling combustion-engined vans. Are yours?
‘It’s very much a hard stop in terms of the government position on that. If we take the true commercial side first, we’re seeing customers of ours trying to get ahead of the game and seeking out opportunities where they can provide or utilise electric vehicle solutions. Many want to have made the move by 2025 and want to know what our product portfolio will look like around then. So we are looking to bring products with EV-capability in that timeframe.
“But we also see customers who are maybe a little bit less inclined to initiate those conversations and move away from ICE. When we see that, we’re approaching it from the other side, sharing that roadmap and raising awareness of the capabilities. Of course, we need to offer products that meet their wants and needs, and that’s a balancing act, but we’re trying to do it with one eye on promoting the future.”
Do you think the Government should provide incentives to speed the transition?
“I think we need to work together because 2030 is not far away, and to achieve the goals we need to plan carefully. Incentives help, infrastructure helps, but so does us making the vans as usable and affordable as we can. Eventually there will be an inflection point where all the barriers come down.
“But, yes, Government incentives, be they through tax reductions or threshold emissions levels, are important. Over the next five years in particular the focus will need to be extremely strong as the electric vehicle car park grows, and we reach a higher penetration of electric vehicles, both passenger and commercial. Get this period right and the path can be set.”
You’ve partnered with Ford to develop next-generation vans. How will you ensure VW vans keep their identity?
“The first thing to make clear is the positive benefits the scale of economies brings – we’ll both build better vans as a result of joining forces. The second thing to be absolutely clear on is that there’s already a lot of work and passion going into maintaining our brand identity.
“So, without giving the full story away, I’m satisfied that we have enough visual differentiation in terms of the products to provide that clear, visual clue. After that it comes down to experience, the service dynamics that we’ll build in on the background and so on. Between the looks and the experience, nobody will be in any doubt they are buying a Volkswagen.
Do you think city-only micro-EVs will play a part in that journey?
“It’s an interesting hypothesis. I suspect it’s going to be quite market specific; you have to think about customer use on these vehicles. The appetite for EV in the last-mile delivery space will definitely increase and that will be driven as much by legislative scenarios as anything else, so there will be a focus on them.
“But how micro do we want? I think there’s an interesting space for something with a reasonable load capacity that remains nimble for inner city usage – something car sized but that uses space efficiently will always have appeal.”
And where will autonomy fit in?
“Within VWG, the Commercial Vehicles brand is the lead for autonomy, as we saw with the autonomous drive ID. Buzz at the Munich motor show. Personally, I think the potential is phenomenal – from moving goods long distances to last-mile opportunities. There’s a huge amount of development work going on so I expect the technology to move fast – but the key to unlocking it all is ensuring that the user cases we map out are really thought through thoroughly and that we find the ultimate benefit from a customer and societal perspective. Whatever we do has to boost both.
“Beyond that, we have to be mindful of the legislative boundaries, many of which still need to be ironed out. It’s going to be complex and needs to be dealt with market by market – but I do believe that the benefits will make it worth the effort.”
To run bespoke brand reports using whatcar.com market data, please contact firstname.lastname@example.org