Scott Keogh is Volkswagen of America’s CEO and president, and his company recently announced a collaboration on small commercial vehicles and midsize pickups with Ford, and confirmed those companies’ advanced negotiations regarding possible partnerships on electric and autonomous vehicles. We spoke with him at the North American International Auto Show just ahead of the announcement—made by overall brand CEO Herbert Diess—which accompanied the reveal of a restyled North American Passat. VW plans an $800 million expansion of the company’s facility in Chattanooga, Tennessee, where it intends to hire 1000 workers. They will in a few years’ time be building EVs.
Automobile Magazine: How much responsibility do you have for VW’s manufacturing operations in North America?
Scott Keogh: All. It’s sort of three roles. First and foremost, the biggest role is the Volkswagen brand in America, and getting it back on track and dialed in, and where it belongs to be. The second one is the North American region, which is Canada, Mexico, and of course the States. And that includes the two plants, which are Puebla [in Mexico] and Chattanooga, and everything that goes on in there, all of the purchasing, the engine plant at Silao [in Mexico]. And the third portion is of course the group responsibilities, which of course are things like Electrify America, Audi, Bentley, and Lamborghini, and all those pieces.
Now you’ve had a chance to identify Volkswagen’s situation and what’s been done, what needs to change?
I think a couple of things. I’ve been using this simple phrase: We need to make Volkswagen matter again in America. And I think between some of the strategic choices, where we missed the SUVs, and obviously the TDI fiasco, we’ve made it un-matter to an awful lot of people. My simple mission is to make it matter more profoundly to employees, to the dealers, and to the outside market. I think when companies get into crisis mode, they climb into a bunker. They lose their mojo, they lose their confidence. And I think these are things we need to get back. Everything starts right there.
I think the other thing that can happen is, when you say, “We want to be a volume brand,” it leads to a behavior that says a little bit, well, we need to be like everybody else. I think the last thing Volkswagen should be doing is be like everything else. You have to have a proposition unique to your brand, and then you go activate it and bring it to life.
Of course you have to meet what I call the market opportunity. I’m always a big fan of [saying] you have your best success when you have something that gives your brand a lot of credibility and relevance, and meets a market opportunity. If you hit those two things together, then that’s when you have a boom and things take off.
Does that product exist now in VW showrooms?
I think we have pieces of those cars. I think the Jetta fits there, in my opinion, I think the Golf R and GTI fit there. I think philosophies about the Atlas and Tiguan absolutely fit there, in terms of their drivability and their characteristics for SUVs, and I think electric cars will fit there. I think that’s exactly what Volkswagen should be doing.
Is the market opportunity in America on electric vehicles as big as [that of] SUVs right now? No. Absolutely not. But you also don’t want to just play catch up. We played that game before, and I think when you miss it, playing catch up is a bitch in America, frankly. So I think we want to catch this one [with EVs,] and we want to own it off the bat, as opposed to letting it get ahead of us.
This is something you’re steering and navigating all the time, but that’s what we want to be focused on, and I think we can start doing the steps to getting there. I think one of them might be more symbolic, but it’s a good one. We have a new advertising agency; I think you’ll start to see some different things there. I think we spent too much time telling consumers how inexpensive you can get a Volkswagen as opposed to how great and how cool a Volkswagen is.
We also need to get the dealers back. As you know, there’s no success in America without them. The dealers bore the brunt [of the TDI scandal] firsthand, in the communities, because they’re the ones interacting with the customer and all the disappointment that came with it.
They’re in a much better way [now,] but I think we can do more on their front. I think they’re happy with the mix, they’re happy that we have three products that match the marketplace as opposed to one, let’s say.
How important are the customers who got burned in the TDI scandal? Those buyers always seemed a “go your own way” group, and TDI vehicles seemingly picked up where the original Beetle left off some time ago in that regard. It seems like exactly the wrong group of influencers to end up having lied to. Can you succeed without getting those kind of “VW people” back into the fold?
If I recall right, you [Jamie Kitman] wrote a piece four years ago [that said] something to the effect of, Volkswagen just pissed off the most perfect demographic you could hit. The Portland and Seattle group, who took a risk on this technology that was kind of unknown, bought into it, and felt pride in their communities of having bought into this new technology. Then of course, to have the ultimate betrayal.
It’s as simple a story as that. Look, I’m not going to do some pithy direct-mail campaign and say, “Hey, it’s me, I’m here, and we’re feeling good.” I think you need to earn the damn thing. So if you’re asking me if I want to just let them go, no. Over time, I want to get Volkswagen to matter again, I want to get the trust back. I want to kick the door open so at least they can say, okay, I’m going to give them another look.
I do believe in the redemptive powers of America, but I don’t believe it gets done on the cheat or on the cheap. We’ve got to rebuild our trust by success stories, by announcements like they’re doing today, and just keep getting there.
I do not want to say, “Oh, we can be successful without them.” You can only imagine sitting at a company where you’re launching these ad campaigns and doing these things and promoting dealers, and then the floor drops out from under you, how awful it feels. And I have a profound responsibility to employees and dealers, and to those customers. And yeah, I’d like to get ’em back. But you’re not going to do that with a press release, or a campaign that says, “Come drive a Passat.” It needs a little more time, and more [from] us.
How much of your strategy to regain relevance is global, and how much is specific to the North American market?
I think it’s a blend. On the issue of making Volkswagen matter more, and having a bigger impact, we have, clearly, a North American strategy. I think if you look at the Volkswagen brand, we’re nearly 20 points in share in China, 14 or 15 points in share in Europe—so we have strong bases there. We have two points of share here, so there’s a lot of development room here.
I don’t want to give the impression that we’re going to do a specific, targeted campaign to these 450,000 TDI owners. We’re going to operate as a company that matters again. We’re going to operate as a company that’s ethical. We’re going to operate as a company that’s launching this electric revolution, and then on that path, we’re going to get redemption. The flip side is that, if you look at all the market research, people don’t remember the path, just that [the brand] is gone [to them]. But those [former TDI owners] still live in communities, go to churches, go to schools, go to organic green markets—then we go from there.