IT’S the rumour that has tech geeks excited and the car industry worried.

Technology giants Google and Apple are said to be working on their own vehicles — rather than simply supplying software to the mainstream brands — because they have been hiring the best brains in the automotive business for the past couple of years.

The top secret tech companies have continually refused to confirm or deny any such plans.

But the car industry now believes they are no longer rumours — because they have started poaching engineers as well as electronics experts.

Speaking at a consumer electronics expo in Shanghai on Monday, the head of vehicle development for the Volkswagen-Audi Group, Dr Ulrich Hackenberg, told media that designing a car from the ground up — and then selling it and offering customer support — will be tougher than Google and Apple anticipate.

“Designing and developing a car is quite complex, it’s not so easy to make this and you are (suddenly) a car manufacturer worldwide,” said Dr Hackenberg.

“We know that Apple is a company which is hardware-oriented and software-oriented. If they see a market, a business case for themselves, they will (build their own car).”

Disruptive competition

The German auto industry veteran insists the world’s third biggest automotive group, Volkswagen and its collection of associated brands, isn’t running scared.

“We don’t fear competition and we know what we are able to do,” said Dr Hackenberg. “We don’t know what Apple is able to do, how they will find a way to realise (car manufacturing). But we know we can do a lot of things and we don’t fear competition.”

Dr Hackenburg said Google might be serious about designing and building an autonomous vehicle, but he ridiculed the tech company’s plans to not include a steering wheel or pedals in its car of the future.

“Google is … communicating that they will directly go into an autonomous car,” said Dr Hackenberg.

“They would have a car without pedals and without a steering wheel, but the legal situation does not allow that at the moment.”

Force to be reckoned with

Both Google and Apple are serious about developing their own vehicles rather than just supplying technology that integrates phone connectivity into cars, the car industry leader says.

When asked what advice Dr Hackenberg would give to the technology giants, he said: “I wouldn’t give them any advice. They are big companies, they have good management, they know what they are doing. (But) they have to analyse everything which is necessary.”

“They have to be aware what it means to be a vehicle brand, with all the necessities which you have to be interesting for the customer. It’s not only that you have a car, it’s also that you have to sell the car, you have to make the service, you have to know a lot about the customer besides the connectivity.

“The basic demands of the customer for a car is a big story, so you need a lot of experience.”

Publicity or imminent threat?

In February this year the global boss of Mercedes-Benz — the company that invented the motor car — speculated that plans by Apple to develop a vehicle was nothing more than a publicity stunt.

Mercedes-Benz chairman Dieter Zetsche told News Corp Australia at the time he is not having “sleepless nights” over recent reports that Apple is hiring engineers from the car industry to develop a vehicle that drives itself.

When asked if the rumour was deliberately leaked to generate publicity for Apple, Mr Zetsche said: “I could guess that is the very reason why these rumours are spread. Other than that I don’t find any rationale.”

The Mercedes-Benz boss admitted: “I don’t know their strategy and I don’t know what they’re doing (but) I would be very surprised if that proved to be right.”

The straight-talking boss also said there was as much chance of Mercedes-Benz getting into the smartphone business as there was of Apple making cars.

“I guess when there would be a rumour that Mercedes … plans to start building smartphones they would not be sleepless at night, and the same applies to me,” said Mr Zetsche.

Long and winding road ...

Apple, one of the most profitable businesses on the planet, would be horrified once it found just how slim the profit margins were in the car industry, said Mr Zetsche.

Typically the big automotive brands call it a good year if they make 3 per cent profit on their turnover.

“I mean why (would Apple) with this kind of margin go into this business?” asked Mr Zetsche.

“I think investors would hate it because they don’t like conglomerates, they want focused management on what they understand and perhaps some neighbouring fields, not somewhere different (such as cars),” said Mr Zetsche.

“The fact that you can listen to iTunes in a car doesn’t make it something which is in itself consistent (with developing an entire car). And this is full of respect for Apple,” he added.

Google has been experimenting with autonomous driving technology for years with its fleet of Google Maps cars and last year it unveiled a bubble-shaped vehicle that could drive by itself.

Meanwhile, a biography of Apple founder Steve Jobs revealed that the computer guru always wanted to build a car, but other ventures took priority.

In the meantime, Apple is working with several brands, as diverse as Mercedes-Benz and Suzuki, to introduce Apple Car Play, which brings most of the iPhone’s functionality to a touch screen in the cabin of a vehicle.

This reporter is on Twitter: @JoshuaDowling