Herbert Diess, who has served as the Group’s CEO since 2015, has announced his resignation and will leave the organization on September 1 in a blandly written press release released by Volkswagen Group on July 22. Oliver Blume, the current CEO of Porsche AG, will take over for him.
Chairman of the Supervisory Board Hans Dieter Ptsch pushed Diess overboard while praising him. Herbert Diess was instrumental in promoting the company’s transition while serving as chairman of the Board of Management for the Volkswagen Passenger Cars Brand and as Chairman of the Group Board of Management. Future viability of the Group and its brands is assured, and both its capacity for innovation and financial strength have grown. Mr. Diess made an impressive case for his ability to carry out significant transformation initiatives quickly and consistently. He not only led the business through incredibly choppy waters, but he also put in place a whole new strategy.
After Volkswagen was exposed for cheating on emissions tests with its diesel-powered vehicles, Diess was brought in to save the day, and he performed a commendable job. The Porsche and Piech families, who control more than half of the voting rights and a 31.4 percent ownership share in Volkswagen, reportedly pushed for a change at the top, according to persons with knowledge of the situation who spoke to Reuters . Diess was unrepentant. He made a huge improvement to Volkswagen. But one individual who wished to remain anonymous told Reuters that he had terrible communication.
As Porsche AG proceeds through with its anticipated IPO later this year, Blume will take over as CEO on September 1 and remain in that role. Blume has had a variety of positions within the Volkswagen Group, rising from a trainee at Audi in 1994 to head of production. Prior to working at Porsche, he previously held positions at SEAT and Volkswagen. In 2015, he was elected to lead the Porsche Board of Management, and since 2018, he has served on the Volkswagen Group Board of Management.
Oliver Blume has successfully managed Porsche AG from a financial, technological, and cultural standpoint for seven years in a row. Oliver Blume has demonstrated his operational and strategic skills in several positions within the Group and in several brands. According to Ptsch, he is now the ideal candidate to head the Group and further improve its customer focus and the positioning of its brands and products.
The press announcement stated that Oliver Blume and the entire Board of Management would continue to push forward with the company’s transformation begun by Diess with a leadership culture that places a high value on teamwork.
Not everyone agrees that Volkswagen made the right decision in doing this. Leading two businesses, according to analyst Daniel Roeska of Bernstein Research, might exacerbate a terrible governance position. The CEO-dilution will not be well received by investors, especially because the IPO was intended to increase independence from the Volkswagen Group.
WHAT BROKEN DOWN? Reuters reports that while Diess was adopting an investor-friendly strategy, reducing expenses, and encouraging electrification, the volatility caused by his leadership style weighed on the company’s market value, which has been falling since early 2021. (It’s very plausible that the worldwide pandemic also played a role in that.)
The extension of Diess’ contract will depend on his ability to keep Volkswagen at the forefront of the European auto industry, said Daniela Cavallo, Chairperson of the General and Group Works Council of Volkswagen AG. The dynamics of change in the automobile industry are huge, according to Joerg Hofmann, president of IG Metall, the most powerful union in Germany and vice chairman of Volkswagen’s supervisory board. The choices we made today will enable us to maintain our current pace and capitalize on the lead we have established.
It was obvious that Diess was not regarded as a friend by the people who construct every automobile for the Volkswagen Group. Even though Diess ultimately had little control over computer chip and supply chain concerns, the Porsche and Piech families couldn’t have been pleased to see the value of their assets drop.
With a roughly 25% market share in Europe compared to Tesla’s 13%, Volkswagen is currently the market leader in electric vehicle (EV) sales. However, with Giga Berlin starting to ramp up production, some company employees are concerned that Volkswagen won’t be able to maintain this position under Diess.
According to Reuters, Diess had issues with Cariad, the software division established under his direction. Its objective to deliver a new, unified software platform that would be integrated into the majority of Volkswagen Group vehicles has apparently been years behind schedule and continually over budget.
What is omitted, though, is the fact that Diess has always been regarded as an outsider at Volkswagen because he didn’t advance through the company’s ranks. It is obvious that there are individuals who are thought of as company men, such as Blume and Ralf Brandstetter, and who may have felt a little betrayed when Diess was appointed to replace them.
WHAT WILL DIESS DO NEXT?
Diess didn’t seem to anticipate this. After a particularly difficult first half of 2022, many of us are looking forward to a well-earned summer holiday, he wrote just a week ago on LinkedIn. It appears that Diess’ summer getaway may last a lot longer than he anticipated.
So, what is Herbert Diess’ next move? He is obviously a person with a lot of enthusiasm and vision. When we were in charge of purchasing at BMW, he might have lit the fuse that resulted in CATL. There are going to be a lot more businesses that want to start their own electric car transformation with him on board. I can think of Stellantis or Renault Group as two examples.
Another fascinating possibility exists. Many have argued that Tesla is now prepared for a seasoned business executive to assume the helm from the mercurial Mr. Musk. Elon would then be free to pursue other hobbies like establishing colonies on Mars or serving as the final judge of what can and cannot be spoken online by people everywhere. Although none of those is certain to occur, it’s likely that the CleanTechnica executive dining room would erupt in applause if Diess were to be given the job of CEO at Tesla. You’ll know more as we learn more.
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