VW Group CEO Herbert Diess is out

·4 min read

Volkswagen Group CEO Herbert Diess, the embattled executive who has survived a number of confrontations and power struggles with the board and unions over the past two years, is leaving the company.

The VW AG board said Friday it has appointed Porsche boss Oliver Blume to head up the massive company that includes brands Audi, Bentley, Lamborghini, Porsche and Volkswagen Passengers Cars. VW CFO Arno Antlitz will take the chief operating officer position. Diess is resigning by "mutual agreement."

Blume will continue in his role as chairman of Porsche AG, a position he will maintain even after a possible IPO, the company said.

The changes will go into effect September 1.

“During his tenure as Chairman of the Board of Management of the Volkswagen Passenger Cars Brand and as Chairman of the Group Board of Management, Herbert Diess played a key role in advancing the transformation of the company," the company said in a statement. "The Group and its brands are viable for the future; its innovative capabilities and earning power are strengthened. Mr. Diess impressively demonstrated the speed at which and consistency with which he was able to carry out far-reaching transformation processes. Not only did he steer the company through extremely turbulent waters, but he also implemented a fundamentally new strategy.”

Diess, who took the top post in 2018, has repeatedly come up against the board and labor unions as he pushed the company to move more quickly toward electrification and build software-defined vehicles. Tensions worsened last fall after he made comments about thousands of potential job cuts due to the shift from internal combustion vehicles to EVs. His frequent comments about the dominance of Tesla (and CEO Elon Musk) didn't help.

Last December, Diess managed to win the backing from VW's supervisory board in a deal that left him with less power. Diess was made head of Cariad, the software unit that he has widely broadcast is the future of the company and that he recently said would go through a hiring spree. However, he lost responsibilities elsewhere. Ralf Brandstätter, who had previously taken over Diess' spot as head of the Volkswagen passenger cars brand, was given more power and a spot on the management board.

Just hours before the announcement, Diess posted a lengthy message to his LinkedIn account ahead of the traditional summer break in Germany that noted the first six months of the year was demanding and stressful for employees.

"After a really stressful first half of 2022 many of us are looking forward to a well-deserved summer break," he wrote. "In addition to COVID, which struck our Chinese colleagues extremely hard, we have a war in Europe. Production was still held back by semiconductor shortages and because of a world under stress we saw many other supply challenges and soaring raw material and energy prices."

He did note some positives, including its efforts to produce and sell EVs.

"High demand in China, Europe and even the U.S. In the first half [of the year], many of our EV products like the ID.3 and ID.4, Q4 e-tron or Porsche Taycan are sold out for many months of production. China has been bouncing back over the last couple of weeks; we were able to gain back market share and are once again the undisputed No. 1. And we had really exciting and emotional product launches like the ID.BUZZ. Premium is doing especially well. And in many of our regions we could continue to improve our market position and financials, further strengthening our resilience. You will see this reflected in our earnings numbers, which we will present next week."

In May, VW announced plans to create a spinoff EV brand called Scout, a dedicated company in the United States that will produce an all-electric pickup and a rugged off-roading SUV geared toward the American consumer. The new brand, named after the iconic International Harvester Scout that came to market in the early 1960s, would begin producing the two EVs by 2026. The automaker announced in July that Volkswagen Group of America CEO Scott Keogh is stepping down to helm the Scout brand.

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