It will be the crown prince: Porsche's flower inherits VW boss Diess

Created: 2022-07-22Updated: 2022-07-22 8:58 PM

The Volkswagen brand tower on the car company's premises in Wolfsburg.

© Julian Stratenschulte/dpa/symbol picture

Bad air between the CEO and some of his top controllers: In the “Wolfsburg system” in the past few years, that was at times almost the norm rather than the exception.

After all sorts of rumours, there is now clarity: Herbert Diess is giving up the lead.

Wolfsburg - In the end it was probably a problem, one argument too many.

Herbert Diess is said to have twice narrowly avoided being thrown out as VW CEO, on Friday evening - shortly before the factory holidays in Wolfsburg - the surprising news came: The busy chairman, who was often criticized for his erratic behavior and roughness, is leaving.

On September 1st, he will be succeeded by the head of Porsche, Oliver Blume.

A brief message to the financial world after a meeting of the inspectors sealed the end of the Diess era - almost exactly seven years after he switched from BMW to Lower Saxony.

There were several indications that it could happen.

But in the end the measure seemed to be full - and Diess couldn't go any further.

At least that's what voices from corporate circles who have closely followed the development of the past few months suggest.

Blume had already been in the reserve as a possible crown prince.

He is considered a highly talented manager, has been very successful at Porsche to date - and is more of a quiet man, in communication and in strategic planning.

In addition to his function at the top of the group, Blume should also remain head of Porsche.

With the IPO of the high-yield sports and off-road vehicle subsidiary by the end of the year, the group has big plans, especially in the current uncertain environment.

VW CFO Arno Antlitz Blume is to assist in day-to-day business in Wolfsburg.

Beyond the technical tasks that are expected of Blume, the personnel could also mark a change in management style.

This is highly regarded in the industry.

Without him - almost everyone agrees - VW would not be where the largest European carmaker is today, especially with its range of electric cars.

But in the atmosphere it was not an easy time for some managers.

And certainly not for the workforce.

Chairman of the Supervisory Board Hans Dieter Pötsch thanked Diess.

He was instrumental in driving the transformation forward.

However, there have also been problems recently, especially with the sluggish development of proprietary software systems, which is again becoming significantly more expensive.

Lower Saxony's Prime Minister Stephan Weil, who represents the state as the second most important owner on the supervisory board, paid tribute to Diess.

He gave the impetus for important new projects.

Weil said of Blume: "I am confident that he will lead the Group with prudence and foresight in a team with the Executive Board, in good cooperation with the works council and with great respect for the employees."

The last point, the appreciation of the employees, might make some people sit up and take notice.

Diess often found this rather difficult - at least from the perspective of the works council and a number of colleagues on the assembly line.

It started at the latest when many felt left alone with the bumpy start of the core models Golf 8 and ID.

Employee representatives criticized the lack of a crisis strategy and the constant increase in pressure in production.

IG Metall expressed its distrust in an open letter to Diess.

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Union leader Jörg Hofmann, like Weil and works council leader Daniela Cavallo in the presidency, emphasized that VW had to "live up to its role as a social role model in addition to its role as a technological favourite".

Cavallo said the upheaval was difficult.

VW must emerge stronger from it.

"However, it is also our aim that, despite the great challenges, job security and profitability remain equal corporate goals."

On the other hand, some people had rumored that Diess could possibly go it alone.

He is said to have felt slowed down by the employee bank on the supervisory board when it came to restructuring the group, central personnel matters and proposals for more efficiency.

He often clashed with Cavallo's predecessor Bernd Osterloh.

The scandal followed in the summer of 2020 when Diess accused members of the supervisory board of “crimes” and “lack of integrity” for piercing sensitive information.

Then it was not well received that he demanded additional backing through an early contract extension.

Diess stated that one of his goals was to "break up old, encrusted structures and make the company more agile and modern".

Cavallo initially supported a contract extension for another four years.

The next knock came last fall, when Diess is said to have asked for ideas for further savings proposals by e-mail without consulting the supervisors in the management circle.

In the medium term, up to 30,000 possibly excess jobs were brought into play.

The differences meant that the conclusion of the planning round about the investments had to be postponed.

The weak capacity utilization of many plants due to the chip crisis and the resulting short-time work for tens of thousands of employees also caused great resentment.

Cavallo accused Diess of a poor supply concept - instead he prefers to take care of PR appointments and even pose with Tesla boss Elon Musk.

On the other hand, many investors considered Diess' change of course in the direction of e-mobility and software to be more courageous than in almost any other company.

His style was more admired than criticized here.

The Porsche/Piëch families, as VW's main shareholders, repeatedly supported him.

Diess switched from BMW to VW in July 2015, just before the emissions scandal broke.

First, he steered the VW core brand through three difficult "Dieselgate" years before he was also appointed head of the entire group in April 2018.

After the row with the inspectors in the summer of 2020, he had to hand over management of the main brand to Ralf Brandstätter.

Brandstätter is now going to China as a board member.

Recently, nervousness has spread in many areas due to the backlog in software development.

At a meeting two weeks ago, the inspectors discussed the discrepancies in the expansion of the Cariad IT division.

This should design a uniform program and electronic platform for all future models.

After objections, especially from the subsidiaries Audi and Porsche, development there will initially continue in parallel.

Diess recently explained to the workforce that the timing in software development had to be improved.

Splitting up the tasks will cost VW up to half a billion euros here.

“Setbacks in individual projects are part of it.

We still have to learn software culture.” He had overall responsibility for the central strategic area alongside electromobility.

A few weeks ago, the outgoing VW boss jovially explained various plans that he had with the company in the near future.

Unlike before the summer break last year, however, this time there was no video in which he sped across the Mittelland Canal with an electric surfboard.

dpa