Outgoing VW UK boss calls for ‘complete coherence’ in EV policy

Outgoing Volkswagen Group UK boss Alex Smith has said there must be “complete coherence” in all government policies to speed up the shift to EVs and that this is essential for car makers, “given the product investments already made”. 

Smith left the German company at the end of November and has been replaced by Damien O’Sullivan, who most recently led Audi in Ireland. 

Smith is broadly supportive of the government’s zero-emission (ZEV) mandate for giving “a clear legislative path” for car makers to plan for while also “giving an incentive for those that wish to invest in infrastructure”.

However, he believes the decision to review it was right, as “you have no certainty as to what the natural rate of [EV] take-up” is or what “the trajectory of the natural rate of take-up is going to be”.

“Therefore it’s sensible to have a degree of flexibility,” Smith said, particularly as the past three years of EV sales were “broadly flat”.

One route to compliance with the ZEV mandate is to restrict sales of ICE cars, but demand for new car sales in general is suppressed, so this wouldn’t lead to a boost in EV sales, only an artificial increase in their market share.

More broadly, Smith said the private car sales market needed a “boost”, because it’s currently “operating at financial-crisis levels”.

He said: “The retail market year-to-date is lower than 2020, when we were shut for three months [due to the Covid pandemic].

“The first thing you’ve got to do is boost the market. The second thing you’ve got to do is improve the mix of zero-emission vehicles. So if you’ve got a legislative approach which could have the effect of reducing the overall market and not improving the mix of zero-emission vehicles, you’ve failed.”

To that end, Smith “hasn’t changed” his view that there also must be incentives for EV buyers, as the current stagnation in retail sales of EVs is “very concerning” given that so many new EVs have been introduced to the market (32 this year by Smith’s count), backed up with some £1.5 billion of incentives.

“Retail incentivisation or incentivisation for private consumers is really important, not simply for the mathematical elasticity effect of ‘if you reduce the price, you’ll sell more volume’. 

“But where it’s really important is it signals a clear direction of travel that zero-emission vehicles are the way to go, because they are an essential component of the decarbonisation of road-surface transportation.

“It would be great going forward to see congruence between all stakeholders in the way that we approach the messaging to the public, because polarisation helps no one. It’s the coherence and congruence of the message that will be really, really useful.”

Career reflections

Smith said he had “adored” the role that he started in January 2019, having stayed in it more than twice as long as any other role in his career, but he felt it was time for Volkswagen Group UK to get “fresh eyes and fresh energy”.

Smith leaves the firm with Volkswagen firmly established as the number-one car brand in the UK, with second place at the end of October another group brand, Audi.

Seat/Cupra, Skoda and Volkswagen Commercial Vehicles are also on for record market shares, while the group is number one across all powertrain types.

Smith said that while such things as a national sales company were always the result of a three-way effort between “the brilliant people who design, engineer and assemble the vehicles, the national sales company and the dealer/sales/distribution networks”, some of the things he is most proud of are the things that were more under his control.

“Some of the things behind the scenes have been really, really satisfying,” he said. “When I took over, our new-car customer loyalty was at the lowest level it had ever been; it’s now at the highest level it has ever been.”

Smith said he was also proud to have overseen an almost doubling of women in management positions to a level that now sits above 30% in the group.

He navigated the firm through several huge challenges and crises, including Brexit, Covid, a semiconductor supply shortage and a cost of living crisis.

Throughout this all, a transition to EVs begun, and Smith said that while the shift from the early-adoption phase to the mass-adoption phase “brings lots of challenges, it also brings lots of opportunities”.

“When the industry looks at what it has contended with over the last 60 months, it has shown that it’s very, very adaptable and is a very, very innovative industry. It’s also an extraordinarily resilient industry.

“There will be opportunities in the five years ahead, and the adaptability of this industry, I think, is legendary.”

Smith’s previous industry roles include leading Nissan in Britain and both the Volkswagen car and Volkswagen commercial vehicle brands in the UK. He has also worked at Ford and Kia and in nearly 20 years of director positions in the UK industry has racked up almost four million car sales. 

While a role leading a group rather than a brand doesn’t typically carry as much glory, Smith said he “never really felt I needed it” and it had instead “been a pleasure” in steering and collaborating with various brands and functions to “achieve some phenomenal results”.

Of all the cars the Volkswagen Group launched in his time there, Smith feels “a particular identification and identity” with the VW Golf, which is also the most-often chosen of his 50-plus company cars.

The VW XL1 proved “the most remarkable experience” to drive, but the biggest public reaction came from a bright-orange VW Amarok Canyon with a huge light bar on the roof. A yellow VW Beetle with a red leather interior (and of course a flower on the dashboard) was his most unusual car, one he was surprised yet pleased to not attract the veto of the used car team on company cars.

“I saw it as a challenge and a sport to see the strangest specifications I could get through were,” he said.

Smith will now take a break but plans to return, as “hopefully I’ve got some skills which may be of use to this industry in the next few years”. 

“I’ll have a bit of a rest and think and work out what to do next,” he said.