Herbert Diess didn’t just say goodbye to the holidays. The still-Volkswagen boss loses his job at the end of August. Shortly before the supervisory board surprisingly announced its replacement on Friday evening, the world in Wolfsburg still seemed fine.
Diess sent a holiday greeting to the more than 600,000 employees: “After a really stressful first half of 2022, many of us are looking forward to a well-deserved summer break.” VW is well prepared for the second half of the year. “Happy Holidays!” wished the boss – probably with the knowledge that it would all be over two hours later.
The Porsche and Piëch families, the state of Lower Saxony and IG Metall had already lowered their thumbs over Diess on the supervisory board. On September 1st, Porsche boss Oliver Blume takes over his position. The phrase about a separation by “mutual agreement” only concealed the obvious: Herbert Diess, whose contract actually runs until 2025, has been fired.
The verdict was unanimous and final, the initiative for the expulsion came from the owner families, as the supervisory board said. At the end of last year, the 63-year-old almost lost his job after shocking the workforce with a horror scenario of mass layoffs. Back then, the Porsches and Piëchs helped him. IG Metall chairman Jörg Hofmann spoke of a “last attempt at cooperation”.
Why the supervisors are now at the end of their patience and a change at the top of the group was inevitable can be read from the brief statements on Friday evening: Volkswagen needs a team player, not a lone fighter like Diess.
Despite protestations to the contrary, since taking office in 2018 he has obviously not managed to cooperatively shape the Group’s conversion from a car manufacturer to a software and electromobility provider.
Diess loved and lived confrontation and provocation. He scored points in public, but internally the number of his opponents and the size of the construction sites grew: lack of semiconductors, software problems, the tired China business.
“He didn’t manage the day-to-day operations,” says one in the company. “He didn’t understand the seriousness of the situation, especially not that the team had to be motivated,” it says elsewhere. “We not only have to transform our products and business models, but also our workforce,” said the head of the group works council Daniela Cavallo.
All colleagues would have to be taken along. “Today’s decisions contribute to this.” Gritting their teeth, the works council and IG Metall agreed in 2021 to extend Diess’ contract until 2025.
Stephan Weil, the SPD Prime Minister of Lower Saxony, who sits on the Supervisory Board, made it clear between the lines what the state is now banking on – and what was missing in Hanover: He is confident that Oliver Blume will manage the group “in a team with the Executive Board , in good cooperation with the works council and with a lot of respect for the employees”.
And the VW Group officially emphasized that the new CEO should “continue to drive the transformation forward with the entire board – with a management culture that focuses on team spirit”.
It becomes clear: Blume, who had been traded as a possible successor to Diess for a long time, must quickly improve the climate in Wolfsburg. “People are always the focus for me,” he said in a statement on Friday.
The 54-year-old has been the head of Porsche since 2015 and has excellent references. “You only hear good things about him,” they say. Wolfgang Porsche and Hans Michel Piëch were looking for a long-term perspective beyond 2025 and found it with Blume. Born in Braunschweig, he is considered sociable, communicative and decisive.
“Oliver Blume has enjoyed our express trust for many years,” said a family spokesman. Blume, who has been with the VW Group since 1994, does not play the main role, but has a clear strategic agenda – and not just for Porsche. He has also been a member of the Group Executive Board since 2018.
Porsche not only brings in the highest returns in the automotive industry, the sports car manufacturer is also an innovation driver in the entire VW Group alongside Audi. Blume steered the company in the direction of electromobility early on, and by 2030 the share of e-models in total sales should be 80 percent. The electric Taycan is already selling better than the Porsche icon, the 911. In 2021, sales of electric models doubled.
But success arouses desires, the competition in the multi-brand Volkswagen group is extremely tough. Recently there have been disputes at the software unit Cariad, which is struggling with the development of the central software stack for all group brands.
As premium brands, Porsche and Audi claimed the top position in the use of the new software, but Herbert Diess put the brakes on Blume and Audi boss Markus Duesmann in favor of the volume brand VW. In retrospect, a capital mistake.
“Diess’ blatant weaknesses came to light at Cariad,” says an observer. Instead of putting the parts together and bringing the influential brand bosses together, he sought confrontation. Nobody fails to recognize that the task is huge: to develop competitive software – for a giant corporation with 120 plants worldwide and selling almost ten million cars a year. “It’s a very tough task and nobody expected it to be quick.”
But things went too slowly at Volkswagen. All car manufacturers are researching and developing similar technologies, the tech companies are about to enter the car industry, and the time pressure is enormous. And there are other high-risk areas in the VW Group, for example battery cell production, which the company also wants to build up on its own with investments worth billions.
Herbert Diess, which is also recognized by the supervisory board, has opened up these business areas, he has readjusted the company’s strategy and gained a reputation in the industry as a supporter of a sustainable traffic turnaround. However, the accompanying “big ego show” that some in the company accuse him of was his undoing. “This has been given several opportunities to change its behavior – but not used,” describes one.
With Oliver Blume, who is considered a production expert as a mechanical engineer with a doctorate, the course is now to be continued with more commitment and better internal communication. In addition to his new function at the top of the group, he will remain head of Porsche and prepare the IPO of the sports car brand.
As the second strong man in the group, VW CFO Arno Antlitz will support him as Chief Operating Officer (COO). According to dpa, Herbert Diess will be paid by VW as a consultant until the end of the contract.
