VW and Daimler are among automakers re-inventing themselves as tech companies as they bid to attract a new generation of tech-savvy employees such as software programmers and IT specialists.
Daimler got lucky with Marcela Craciunescu. Five years ago, the Romanian software developer had been at Alcatel-Lucent developing a fourth-generation mobile network for U.S. telecommunications companies in Timisoara. Craciunescu’s sister, suggested she consider working for the city’s best-known company, Daimler.
While Craciunescu didn’t speak any German, the programmer was looking for a change and found herself typing in the company’s Internet address on her computer. It was here that she hoped to find the answer to her most burning question: What is Daimler?
When she learned that it was the parent of premium brand Mercedes-Benz, her curiosity was piqued. She decided to apply for a role as a systems developer – not at the automaker, but at the group’s captive financial services business. “They were impressed that I was more interested in the position itself than simply working for Daimler,” she recalled in Stockholm last September during the Me Convention, which was co-sponsored by Mercedes.
IT specialists such as Craciunescu are in high demand as automakers battle to lure programmers, coders and developers for smartphone-enabled mobility services. Companies such as the Volkswagen Group and Daimler are re-inventing themselves to attract a new generation of tech-savvy employees. VW Group premium brand Audi, for example, now describes itself as a “premium digital car company.” BMW went further by purging any direct reference to its traditional product in the group’s mission statement. Instead, the company with the word “motor” as its middle name aims to be seen as a “tech company for premium mobility.”
Mercedes, meanwhile, opted to unveil its new CLA last month at CES in Las Vegas, where incoming Daimler CEO Ola Källenius said the automaker now operates “as a software company [that] builds trailblazing mobile devices.” At the World Economic Forum in Davos, Switzerland, last month VW Group CEO Herbert Diess said he now leads a “software-driven car company.”
But are these just superficial attempts to change investor perceptions and to appear trendy? Remarkably, more than half of the car executives still believe they could win the “battle for the dashboard” against tech giants without the need for partners that can share investments, contribute IT assets and provide digital skills. Many others acknowledge they need alliances, but only temporarily as a stop-gap measure until the necessary expertise is acquired.
“Those auto manufacturers that prefer to sit in their own walled garden thinking they can bring these guys in, control them and then throw them out in two years, they are the ones most at risk,” Bearing Point analyst Angus Ward reckons. Contrast this with companies such as Google that club together with rivals to co-innovate, which slashes capital requirements and time to market. “They [carmakers] have to beat the tech giants at the tech giants’ own game,” Ward said. Craciunescu’s story, however, is symbolic of the dilemma facing automakers. Even if they have finally discovered the “ecosystem,” not every software developer has discovered them.
Herbert Diess, after taking over as VW Group CEO, said: “There is no time to lose, especially when it comes to amassing digital know-how. We need a “massive expansion of our software expertise.” Roughly 90 percent of all future innovation in the car will take place in the electric/electronic area. The bulk of that will be in software, according to VW Group. The skills needed here is exponentially growing and there is definitely a shortage.
From a vehicle IT perspective, an area for which the brands themselves are responsible for rather than the group, greater in-house expertise would also help to reduce procurement costs.
The core business needs to adapt, too, and software expertise must be developed in-house if carmakers are to remain competitive. Carmakers know better than to expect developers to come and work in a city such as Wolfsburg. Rather, they must put their vanity aside, leave their comfort zones and actively recruit developers.
“The traditional thinking among carmakers in the past years was that people should go to work where we have the assembly plants. In the digital economy, however, you have to go to the people,” VW’s Hofmann said.
Tom George, director of VW’s new Lisbon programming centre, believes it’s just a matter of time before others come around. “Every company is a software company,” George said. “Some just haven’t realised it yet.”