“We can do a lot in our supply chain.”
The major topic that has had the entire automotive industry holding its breath in recent months is the chip crisis. How many sleepless nights has the issue given you?
I have to admit that the semiconductor shortage has kept me really busy in the last few months, though it didn’t stop me getting a good night’s sleep. What we are dealing with here is a structural issue, and that makes the situation even more challenging. The automotive industry is currently feeling the effects of a significant undersupply of semiconductors, which is caused, among other things, by the allocation of chips in the direction of telecommunications and entertainment electronics during the course of the coronavirus pandemic. Moreover, the situation has also been exacerbated by factory closures among key manufacturers due to the pandemic. Together with the other brands in the Group, we are doing all in our power to mitigate the effects of this supply shortage as best we can.
The supply chain for present-day vehicles is very long and globally spread. How does Audi ensure high standards for environment and society?
We work with over 14,000 suppliers from more than 60 countries. We influence all of these players – and they us in turn. This therefore presents a huge opportunity. We can do a lot in our supply chain. Our requirements for our business partners are laid down in the Code of Conduct, in which aspects such as environmental protection, human and labor rights, transparency and fairness are firmly defined.
We set high standards for ourselves and work on ensuring compliance with these values along the entire value creation chain. We can use the Sustainability Rating as a tool in this regard, for example, to assess adherence to social, environmental and compliance standards. A positive outcome here is a prerequisite for awarding a contract. In addition, we continually optimize our management systems and use artificial intelligence that analyzes freely accessible online media and social media for specific keywords and informs us of hits on topics such as environmental protection, human rights violations and corruption in the supply chain.
Whether in the company or on the road, digitalization is the order of the day. How is Audi ensuring secure IT structures in vehicles and services?
Data security is a top priority. That applies to all IT solutions. We treat any potential data breaches seriously and work intensively on precautionary measures. Whether customer, vehicle or production data: It’s very important to us that the highest security standards are met. We therefore continually enhance our security systems to prevent attacks on our IT as far as possible, to identify such attacks in good time and to limit their consequences to the greatest possible extent.
Audi is planning to increase its vehicle sales in the next few years. In other words, you will need considerably more parts and raw materials from markets that are already strained today. How will you overcome this challenge?
As we undergo the transformation to electric mobility, battery resources and renewable energies are obviously an important priority for us. We need to recognize that the commodity markets have become more volatile. Our attention is therefore focused on long-term strategic partnerships so that we can ensure price stability and certainty of supply. We are positioning ourselves on a broad basis in terms of technology and focusing on Group platforms. By bundling our needs across multiple brands, we are strengthening our purchasing position. The conditions for purchasing raw materials are a very important aspect in this regard. The Code of Conduct defines the framework in this context as well. On top of that, the Volkswagen Group is represented in a number of initiatives, such as the Global Battery Alliance, in order to advocate for uniform standards in the supply chain, for example in the area of human rights.
In times of resource shortages, can the circular economy also provide a solution?
Our goal is to manage as many materials in a circular system as can be achieved in an ecologically and economically meaningful way. The priority here is to restore all parts and materials that we recycle to original quality again. This is the only way that we will be able to create resilient supply chains and achieve significant savings in our primary material requirements. We have been operating an Aluminum Closed Loop, for example, at various sites since 2017. In this respect, we were the first car manufacturer to be awarded the “Chain of Custody” certificate of the Aluminium Stewardship Initiative in 2021.
It is probably not surprising that we are looking in particular at battery raw materials in the circular economy. We are entering into strategic partnerships in the Volkswagen Group in order to cover the entire value creation chain for batteries. This extends from raw material sourcing and processing to development of our own battery cells, such as the Volkswagen unit cell, through to management of future European gigafactories. New business models in the area of reusing end-of-life vehicle batteries through to recycling of valuable raw materials will also be included in the scope of action. We want to offer our customers high-performance, affordable and sustainable vehicle batteries.
The new corporate strategy views intelligent hardware as a future business model of Audi. What is behind this and what impacts does it have on your area of responsibility?
In simple terms, it is a service that allows us to include more functions in our cars by using connected parts. With the aid of this intelligent hardware, we will be able to inform our customers in plenty of time if a part has to be replaced, for example. In the medium term, personalized offers for upgrades of specific parts are also conceivable. We are collaborating with our business partners and suppliers in developing and expanding this intelligent hardware. Procurement can therefore make an important difference. This aspect of the strategy will also contribute to the sustainability of our products. For example, we are developing an extensive portfolio of sustainable parts, such as through the reconditioning of used replacement parts.
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