Volkswagen: surprise departure of boss, strategic shift in sight

It was a real thunderbolt in the automotive world. Volkswagen boss Herbert Diess is leaving office in a few weeks after four crucial years at the helm of Europe’s leading carmaker between the scars of dieselgate and the switch to electric. This surprise departure was decided “by mutual agreement” at a meeting of Volkswagen’s supervisory board, according to a press release. Herbert Diess has been in the hot seat for months within the twelve-brand giant, which has been plagued by recurring tensions with powerful staff representatives and other group executive figures engaged in a deep strategic change. The change also comes as Volkswagen plans to IPO Porsche, its most valuable brand, to raise new funds for electrification and massive digital investments.

Certainly the current chairman of the board of management of Porsche, Oliver Blume, who will take the reins of the manufacturer from September 1, announced the group. Arriving in 2018 at the wheel of Volkswagen to definitively turn the page on “dieselgate”, Herbert Diess included the group’s ambition to become the largest manufacturer of electric vehicles in the world by 2025, by injecting tens of billions of euros in this forced-march revolution. His divisive style often pitted him against influential staff representatives but the 63-year-old Austrian always managed to keep his head. “Herbert Diess played an important role in the further transformation of the company during his tenure,” Supervisory Board Chairman Hans Dieter Pötsch said in a statement. “He not only steered the company through very volatile waters, he also fundamentally positioned it strategically,” he added.

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“Cost Hunter”

A favorite of the financial markets for his electricity ambitions, Herbert Diess never hid his ambition to “destroy the old and sclerotic structures” which, according to him, were preventing the giant from making its comeback. Herbert Diess wants to green the image of the builder, multiplying media appearances, speaking of climate change as “the main challenge of humanity”. Faced with the “Technoking” of Tesla Elon Musk, for which he did not hide his admiration, Herbert Diess dreamed of becoming a “Technokaiser”. He joined the group as director of flagship brand VW just before the 2015 diesel engine rigging scandal erupted, earning him a flash promotion.

If he gave Volkswagen one of the most credible change strategies among the “old” groups in the automotive world, he also shook up the Wolfsburg group, where the approval of the “Betriebsrat” was necessary for any strategic decision . Presented at the end of 2019, the electric ID.3 has become the flagship model of Herbert Diess, which is recognized as a “cost hunter”. These repeated confrontations caused him to gradually lose influence. In June 2020, he gave up management of the VW brand. At the beginning of the year, Herbert Diess lost control of operations in China, a strategic market. He directly oversees the Cariad entity, a Volkswagen unit responsible for coding software at the center of the electric and connected revolution initiated by the automotive industry.

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Too many problems with Cariad

“Perhaps Cariad brought too many problems and challenges for the group. Missed production launches and software problems cost a lot of money,” automotive expert Ferdinand Dudenhöffer said on Friday. “We can assume that the new boss will implement a new orientation of the software and therefore of Cariad”, he added. No one is predicting the departure this summer of this social network enthusiast who, again on Friday, wished his employees a good “well-deserved summer break” on Linkedin. Volkswagen’s future strongman, Oliver Blume, joined the group in 1994 holding management positions within the Audi, Seat, Volkswagen and Porsche brands, which he has led since 2015. He is a member of the management board of Volkswagen since 2018. “What is decisive for success is team spirit, fair play and passion”, underlined Oliver Blume during a final outbound trip.

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