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VW ousts CEO Diess, replacing him with Porsche boss Blume

25 July 2022 - 08:11 By Christoph Rauwald and Craig Trudell
Herbert Diess, 63, becomes the latest in a long line of leaders undone by VW’s complex hodgepodge of power centres.
Herbert Diess, 63, becomes the latest in a long line of leaders undone by VW’s complex hodgepodge of power centres.
Image: Bloomberg

Volkswagen AG abruptly ousted Herbert Diess, its CEO and architect of the auto industry’s biggest electrification effort, after repeated clashes with labour unions chipped away at his support with key stakeholders.

Porsche boss Oliver Blume will succeed Diess within weeks, ending a four-year tenure in which his hard-nosed leadership style caused constant friction and undermined his effectiveness. Missteps on key projects, including delays at VW’s software unit, also contributed to the shake-up, people familiar with the matter said.

VW’s board is betting Blume will be a more collaborative and stable leader, said the people, who asked not to be identified discussing private deliberations. He will remain the head of Porsche, which VW is trying to list late this year in what could be one of Europe’s biggest-ever initial public offerings.

Diess, 63, becomes the latest in a long line of leaders undone by VW’s complex hodgepodge of power centres. Skirmishes between the manufacturer’s controlling shareholder family, trade unions and the German state of Lower Saxony that holds a significant stake have undermined performance and ended careers.

“Herbert Diess has strategically geared Volkswagen group toward electromobility,” Wolfgang Porsche and Hans-Michel Piech, leaders of the family with majority voting rights at VW, said in a joint statement.

“It is to his particular credit the Volkswagen group today is in a strong position for further transformation.”

Diess was hired from BMW AG in 2015, shortly before VW admitted to rigging millions of diesel vehicles to cheat on emissions tests. He has arguably pushed the most aggressive electrification effort among legacy car manufacturers, earning plaudits from Tesla Inc boss Elon Musk.

Blume, 54, has been viewed as a potential successor to Diess for some time, though any changeover was seen as years away. VW’s board extended Diess’ contract around this time last year to 2025.

He’ll be flanked by Arno Antlitz, who will become VW’s COO in addition to CFO.

Less than two hours before VW announced Diess’departure from the management board, he tweeted a LinkedIn post wishing employees a happy summer holiday and wrote that the company was in good shape for the second half of the year.

Blume started at VW as a trainee at Audi, then rose through the ranks at Seat and the company’s namesake brand before joining Porsche in 2013 as head of production. He managed to largely contain Porsche’s involvement in the diesel-emissions scandal that cost the manufacturer more than 30bn (roughly R527,652,566,000).

Diess initiated an ambitious push into battery cell production and got backing for the IPO of Porsche, which is planned for the fourth quarter. At the same time, he occasionally allowed friction with VW’s unions and other stakeholders to spill over into public. He likened VW to a “tanker” with “old, encrusted structures” in need of breaking up, vowing to modernise the company and move more quickly.

VW’s efforts to develop its own software also have been plagued by internal wrangling and delayed important projects, including a line of next-generation Audi EVs and an updated Porsche Macan sport utility vehicle.

While Diess enjoyed wide-ranging support among analysts and investors, VW’s stock price has languished in recent months. Its preferred shares have declined 24% this year, dropping the company’s market value below 84bn (roughly R1,444,530,350,760), a far cry from a target of 200bn (roughly R3,439,357,978,000) mapped out in 2019.

Blume also will be left with the unfinished business of reviving VW’s relevance in the US. Diess had set a target to double market share in the country and planned to spend $1bn (roughly R16,859,350,000) reviving the Scout brand as a maker of electric SUV and pickup models to take on the likes of Ford Motor Co, General Motors Co and Rivian Automotive Inc.

The VW brand, which swung to profitability in the US last year, has long struggled due to the lack of popular SUV models in its lineup. In March, VW pledged $7.1bn (roughly R119,701,385,000) over the next five years toward improving its US offerings and boosting battery research and manufacturing capabilities.

VW’s board convened this week in Chattanooga, Tennessee, where the automaker produces Atlas SUVs and the electric ID.4. Scott Keogh, who returned the VW brand to profitability for the first time in years, was tapped to head the Scout brand, while Pablo Di Si, an Argentine in charge of VW South America, was named Keogh’s successor as head of the Americas.

More stories like this are available on bloomberg.com


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