How Volkswagen Is Developing AI to Improve Sales Planning and Connect the Customer and Employee Experience

Used to power headline-making technologies such as self-driving cars and preventative maintenance, Artificial Intelligence (AI) is emerging as one of the principal drivers in an automotive industry which has been experiencing variable fortunes in recent times. The Centre of Automotive Management in Germany has noted in a report that “the ‘fat years’ in the automotive industry are over for now… technological, economic, and political changes are now announcing difficult times for the industry.”

One of the biggest names in the industry – Volkswagen – is developing AI to improve its sales planning, and to connect the customer and employee experiences.

The Need for New Approaches to Technology

New players are entering the vehicle market at an alarming rate, ranging from ride-hailing companies and subscription-based pricing models to electric scooters and autonomous vehicles. To complicate matters, fewer young people are looking to earn a driver’s license compared with previous generations.

In meeting the demands of an evolving market, the automotive industry also has to contend with its fundamental nature as a mature product – a commodity with a traditionally high price tag and high maintenance costs, which begins to depreciate as soon as it’s purchased. The prices of new models continue to rise, even as manufacturers add new safety features and technology.

The world’s biggest car makers are investing heavily in new technologies in order to remain competitive. One of these is AI, which is already being used to improve the design, manufacture, and marketing of vehicles.

How Volkswagen AG Makes AI A Part of Its Innovation Strategy

In 2013, Volkswagen AG opened a highly-specialised research centre known as Data:Lab Munich, with data analytics as its primary focus. The centre’s team of experts is now working on developing Artificial Intelligence.

With the high costs and low margins traditionally associated with the motor industry, Volkswagen is looking to AI as a vehicle to boost operational efficiency, improve quality control, promote better understanding of its markets and buyers, and enhance the customer experience. Volkswagen anticipates that AI will fundamentally change the company’s value chain, which will now begin – and not end – with the production of the vehicle.

Staffing Data:Lab Munich With the Right Mix of Talents

Data:Lab in Munich is now Volkswagen’s main research base for Artificial Intelligence. Around 80 IT specialists, data scientists, programmers, physicists, and mathematicians operate at the site, researching and developing applications in machine learning and AI.

Leadership and coordination are essential elements of any joint research effort, and in 2016, Volkswagen took a key step in recruiting has Professor Patrick van der Smagt to lead the AI team. Van der Smagt is a former Associate Professor at Technische Universität München, and is described by Volkswagen as one of Europe's leading experts in deep learning and robotics.

How Volkswagen’s Experts Are Applying AI in Practice

According to Volkswagen Group Chief Information Officer Martin Hofmann, "Top specialists from Volkswagen, industry partners and the academic world as well as startups jointly develop and test forward-looking ideas in our labs – working in an environment similar to Silicon Valley."

One particular area of focus is applying AI to market research and marketing, so as to anticipate changes in demand and consumer choice outside of the industry’s traditional 7-year model cycle. Using AI, Volkswagen is creating precise market forecasts with a multitude of variables including economic development, household income, customer preferences, model availability, and price.

At Data:Lab Munich, Firas Lethaus is in charge of transferring technology to concrete areas of application. Concrete applications are already being deployed in areas such as sales planning, and the distribution of replacement parts. Data:Lab teams have developed over 100 AI applications, many of which are going through trial runs in different parts of the company.

How Volkswagen Australia Is Using AI to Link Customer and Employee Experience

Having experienced a 100% employee turnover rate for certain job positions in recent years, Volkswagen Group Australia took proactive steps to connect employee experience to the customer experience. The moves began about four years ago, with the formation of a customer experience division.

The reasoning was straightforward. In the words of Jason Bradshaw, Director of Customer Experience and Marketing at Volkswagen Group Australia, “How do you move from product centric to customer centric? By putting employees first. Treat your staff the way your customers should be treated.”

Volkswagen began by working with front line managers at dealerships, to focus on their leadership skills, communication skills, and their ability to onboard team members. Volkswagen Australia created a survey for dealership employees. About 50% of the study was about the experience of being an employee of the dealership, and the other half was about the experience representing the Volkswagen brand.

Data from this exercise was harnessed in making several improvements at each dealership, and to create employee experience targets.

In recognition of the changes occurring in the job market, the company launched a new careers site named I Am Volkswagen. Reflecting the link between the customer experience and the employee experience, the site is designed to get people excited about the Volkswagen brand, and to engage prospective employees across a wide range of career interests.

The company also uses analytics tools based on Artificial Intelligence across its social platform and other channels to get a better understanding of brand perceptions and customer satisfaction at different points in the customer journey.

Final Thoughts

With these global strategies, Volkswagen is using AI to meet the three fundamental challenges currently facing the automotive industry: improved quality, cost and waste reduction, and customer demands. While these areas may not have the headline-grabbing potential of self-driving cars, they are the differentiators that will determine the survival or otherwise of car manufactures – not just in Germany, but worldwide.

Artificial Intelligence in the motor industry is set to be a hot topic at eTail Germany 2020, taking place in March at the Intercontinental, Berlin.

Alexander Borek, Global Head of Data, Analytics & AI, Volkswagen Financial Services will be one of the keynote speakers.

Download the agenda for more information and insights.