Volkswagen to introduce vehicle-to-vehicle communication as standard from 2019 as Fitch improves debt rating

29 June 2017

29 June 2017

Volkswagen intends to include pWLAN (wide local area network) communication technology in its vehicles as standard to reduce road accidents. This will allow information to be shared in real time in milliseconds between all fitted cars in a 500m radius to enable instant response to short-notice emergency incidents such as black ice and emergency braking, and even allow vehicles to ′look’ round corners. The technology has the enormous power to prevent millions of road deaths worldwide every year.

Volkswagen will start fitting its first models with the technology (IEE 802.11p) from 2019 – technology the auto industry has standardised and tested for direct communication between vehicles and transport infrastructure. It is cooperating with authorities, ministries of transport and other carmakers and transport industry partners to ensure widespread use of the technology, particularly to ensure it becomes standard across all vehicle brands and includes trucks and emergency vehicles. Once the latter equip the technology, drivers will be able to receive advance warning of how far away approaching emergency vehicles are – even before the vehicle can be heard or seen – since the car communicating the information within 500m can get that information from another 500m away (up to 1000m away in total), and so on.

This will also greatly aid the roll-out of autonomous vehicles, by increasing the amount of data they have to make smart decisions. Black ice on the road, for example, can be detected by on-board sensors, causing vehicles behind to slow down. While the system will focus on warnings at short notice from 2019, the technology clearly has much wider potential. Volkswagen is also working to enable other elements of the transport infrastructure, such as traffic lights, to be integrated into the system in the future, both to improve road safety and also to reduce congestion by improving traffic flow – allowing vehicles to travel at the optimal speed within speed limits to avoid having to stop at the lights.

Head of Vehicle Body Development for the Volkswagen brand, Johannes Neft, said: ′We want to increase road safety with the aid of networked vehicles, and the most efficient way of achieving this is through the rapid roll-out of a common technology.’ The pWLAN technology will be in addition to mobile phone connectivity. The localised nature of WLAN data means that no data is stored centrally and so there are no ongoing communication costs (an advantage over mobile network connections) and it does not rely on patchy mobile phone network coverage. Notably, this also makes the network much more secure from external cyber-attacks.

Combined with automatic braking on vehicles, the technology has the potential to avoid multi-car pile-ups and even the initial accidents themselves. The greater the number of cars with the technology installed, the more powerful and effective it becomes.

Meanwhile, Fitch has upgraded Volkswagen Group’s debt outlook from negative to stable, on optimism from its turnaround strategy and overall financial health. It said that the bulk of the group’s operational and financial risks associated with its Dieselgate scandal were now known and so while further legal action was still a possibility, the risks have now become manageable. It reaffirmed Volkswagen’s BBB+ long-term debt rating, which is three ranks above junk. It lowered the rating from A in November 2015 following the breaking of the scandal. Fitch said: ′In particular, we believe that the group could accommodate several billion euros in additional fines and/or recall and repair costs and still sustain its current ratings,’ adding that the group had shown ′strong resilience’ across the diverse 13-brand group since the start of the crisis.

Volkswagen has so far set aside a record-breaking $25.7 billion (€22.6 billion) for buying back or fixing vehicles – with the bulk of that cost going to the United States, due to its litigation-friendly culture, despite selling relatively few vehicles there. This cost is in addition to further costs from lawsuits associated with its cheating of emissions tests in as many as 11 million of its diesel cars worldwide. To cover these costs and prevent a repeat of the scandal, the group is in the midst of a major reorganisation effort overseen by chairman Hans Dieter Poetsch, which in addition to early retirement schemes for its blue collar operational workforce, is now being extended to its managerial staff to flatten out hierarchies and encourage entrepreneurial thinking.

Analysts widely believe Volkswagen Group will be a far stronger company in the long term as a result of the crisis.

Photograph courtesy of Volkswagen Group

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