VW's Keogh: Rising interest rates, recession just another ‘bump' for industry to overcome

WASHINGTON — Dealers and automakers shouldn't necessarily worry about rising interest rates and potential recession because it's just one more rogue wave in what's been more than two years of overwhelming challenges, the North American head of the world's second-largest automaker said.

"If things get bouncy, the reason I'm not so worried is that things over the last two years have been nothing but bouncy," Scott Keogh, CEO of Volkswagen Group of America, told attendees here at the Automotive News Congress.

In a wide-ranging discussion with Automotive News Publisher KC Crain, Keogh said the industry transformation to electric propulsion is speeding up, both in terms of consumer demand and automaker and dealer abilities to meet that demand. He said that localized production of the ID4 electric compact crossover will begin within the next few months in Chattanooga and will have a broad impact on potential electric vehicle buyers.

"We need more, and we need more immediately," Keogh said of ID4 production. He said that right now, VW is importing "anywhere from 800 to 2,000" ID4s per month from Germany. "Once we get that plant going, we'll be sending out 7,000 to 8,000 per month." As a result, he said, the German brand should actually see ID4 inventories climb at dealerships early next year, allowing EV-curious consumers an opportunity to buy off dealer lots, as they have historically done with traditionally powered automobiles.

Keogh also noted that VW was "emotionally" supportive of a letter from the CEOs of General Motors, Toyota Motor North America, Ford Motor Co. and Stellantis seeking a lifting of the 200,000-vehicle-per-manufacturer cap on $7,500 federal EV tax credits for consumers. "We weren't part of that, but we supported that."

Keogh said the auto industry would like to solve its problems with making affordable, profitable EVs itself, "but I view it like a runway, and we have a giant, giant airplane that needs to get off the ground, and certainly those incentives go a long way to make that happen."

In response to another question, Keogh said government has a role to play in the transformation to electrification, but it also must play a role in transforming the U.S. economy from a service economy back into one that manufactures products and mines its own minerals. He said factory work can be "brutal, difficult, challenging work" when compared with a job at a coffee stand and that automakers need to make those jobs attractive to lure workers to the industry. But, he cautioned, U.S. workers cannot make everything that the nation needs.

"We need to have a nuanced environment here. World trade and global trade are still a worthwhile thing," Keogh said.