Volkswagen’s CEO Diess Ousted After Tumultuous Tenure, Porsche’s Blume to Succeed

Reuters
By Reuters
July 22, 2022Businessshare
Volkswagen’s CEO Diess Ousted After Tumultuous Tenure, Porsche’s Blume to Succeed
Herbert Diess, CEO of German carmaker Volkswagen AG, poses in an ID.3 pre-production prototype during the presentation of Volkswagen's new electric car on the eve of the International Frankfurt Motor Show IAA in Frankfurt, Germany, on Sept. 9, 2019. (Wolfgang Rattay/Reuters)

BERLIN—Porsche Chief Executive Oliver Blume will take over from Herbert Diess as CEO of Volkswagen, the carmaker said on Friday, after a supervisory board vote forced Diess to step down from his four-year tenure following a series of missteps over strategy and communication style.

Blume will take over from Sept. 1, keeping his position as CEO of Porsche alongside his news responsibilities—”including in the event of a possible IPO”, a statement said.

The 54-year-old has held numerous roles around the Volkswagen empire, from trainee at Audi to production chief at the Wolfsburg headquarters to head of production and logistics at Porsche from 2009 and CEO from 2013.

His latest challenge is spearheading the company’s effort to list on the stock market as it shores up funding to shift to electric-driven sports cars.

The dual role leading both companies could “make a bad governance situation worse,” analyst Daniel Roeska of Bernstein Research warned. “We do not think investors will like the CEO-dilution … especially if the IPO was supposed to create greater independence from the Volkswagen Group,” he said.

Volkswagen executives have pegged a possible initial public offering (IPO) of Porsche in the fourth quarter as a means to fund its makeover as an electrification-oriented carmaker spanning software, batteries, and cars, though poor market conditions mean a listing could bring in billions less than originally hoped.

Diess’ future at Volkswagen has been in doubt on multiple occasions, most recently in autumn last year after he stated a mismanaged transition to electrification could cost the carmaker over 30,000 jobs. He was also lambasted for his frequent public warnings that Volkswagen was falling behind Tesla.

While Diess was seen as taking an investor-led approach, cutting costs, and focusing on electrification, the instability over his leadership eventually weighed on Volkswagen’s market value which has been on a downward spiral since early 2021.

Workers’ council chief Daniela Cavallo had warned that support for the extension of Diess’ contract would depend on whether he could keep Volkswagen at the forefront of Europe’s car industry.

Joerg Hofmann, president of Germany’s most powerful union IG Metall and deputy chairman of Volkswagen’s supervisory board, said: “The dynamics of change in the automotive industry are enormous … The decisions taken today will allow us to keep up the pace and exploit the lead we have carved out.”

In Europe, Volkswagen is ahead on electric vehicle (EV) sales with roughly 25 percent market share compared with Tesla’s 13 percent.

But whether it will remain in first place is unclear, with its production times for an EV currently three times longer than Tesla’s and a new electric-only factory not set to open until 2026.

Listing the carmaker’s achievements this year so far in a LinkedIn post on Friday before the announcement of his departure, Diess said: “After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break.”

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