Germany’s best-known is resigning: Herbert Diess will be stepping down from his top position at Volkswagen in a few weeks. The personnel is not entirely surprising. The Wolfsburg executive floor has been seething since the day Diess moved up to the top of VW.
It has often been prophesied, now it has happened: Volkswagen boss Herbert Diess is leaving. As VW announced on Friday evening shortly after the stock market closed, Diess had agreed with the supervisory board of the republic’s largest car manufacturer that he would leave VW on September 1st. The successor has already been determined: Porsche boss Oliver Blume is to inherit Diess.
Diess himself has been working at Volkswagen since 2015. Back then, shortly before the diesel scandal, the 63-year-old switched from competitor BMW to the Wolfsburg company and was initially responsible for the core VW brand. In 2018, Diess replaced the former Porsche manager Matthias Müller as CEO of Volkswagen AG.
Since then, the manager, who is considered to be efficiency-conscious but tough on reorganization, has repeatedly clashed with other interest groups in the group – above all the unions and works councils. However, Diess did not have much leeway: the diesel scandal shook Volkswagen badly, the share price halved due to the exhaust gas fraud, at the same time the car manufacturer threatened to be left behind in the race against the US electric car pioneer Tesla.
Diess acted accordingly harshly to get VW back on track. His strategy: cut costs, increase margins, and step on the gas on future topics, especially e-mobility. Volkswagen got back on track, both in terms of sales and on the stock market.
Diess also successfully maneuvered the group through the pandemic and the still existing lack of chips: in 2021 there was an after-tax profit of 15.4 billion euros, a good 75 percent more than in the previous year and a good one billion euros more profit than 2019.
With his uncompromising style, Diess was already offending before he really held all the reins at VW. In 2017, when he was still head of the brand, Diess drew resentment from IG Metall. At the time, Diess expressed the suspicion that one could only have a career at VW by being a member of the trade union. On the other hand, the camp around the head of the works council at the time, Bernd Osterloh, commented that Diess was only “still on the board”.
But instead of the unpopular manager’s early departure, he was promoted. Supervisory Board member Wolfgang Porsche attested at the time that Diess was doing “excellent work”. The Zoff with the works council, however, continued. At the beginning of 2020, Osterloh and IG Metall even had to deny planning a coup against Diess.
At the same time, Osterloh made no secret of not agreeing with the management style of the board. On the occasion of the botched start of the Golf 8, Osterloh raged in March 2020: “The consequences of this unrealistic planning are a completely excessive pressure on the colleagues on the assembly lines.” The accusation: The management under Diess wanted too much technology in the flagship too quickly -Model of the group stuck.
The VW boss had only recently made it clear why Diess was exerting so much pressure. “Are we fast enough? The honest answer is: maybe, but it’s getting more and more critical. If we continue at our current pace, things will even get very tight,” warned Diess with regard to competitor Tesla in spring 2020, and added that VW should not rest on its laurels.
The manager also referred to Tesla’s stock market value, which was quickly approaching that of Wolfsburg. In fact, these fears of the VW boss should come true: Tesla’s share price shot up massively in the first year of the pandemic and, with a current market capitalization of USD 822 billion, is worth almost ten times as much as Volkswagen.
Are you still hesitating about investing in the stock market? Our free webinar will give you important food for thought! It will help you to better assess the risks of stocks. HERE YOU CAN SECURE YOUR FREE TICKET!
For this reason, Diess drove the group in front of him, wanted to forge a tech group out of the car giant Volkswagen. At the end of 2020, the powerful supervisory board signaled that it was still satisfied with Diess by approving two important board members. “Without his commitment,” it said in a statement at the time, “the transformation of the company would not have been so consistent and successful.”
The Zoff with the works council, however, continued. Osterloh’s successor Daniela Cavallo also repeatedly took a confrontational course, including in November 2021. As an internal email revealed at the time, Diess had commissioned the management to examine a possible job cut at the Wolfsburg main plant of up to 35,000 jobs – about every second job there.
According to Cavallo, Diess played with the fears of the workforce. Cavallo also reprimanded the VW boss because of an unclear course in relation to the lack of chips. Because of his leadership style, Diess even received a reprimand from the supervisory board and Lower Saxony’s Prime Minister Stephan Weil. Volkswagen is the largest employer in Weil’s state, which itself holds 11.8 percent of VW shares.
Recently, another prestige project of the group caused trouble: Cariad. Actually, VW wanted to shorten the technological gap to Tesla with this self-developed software. Diess himself raved about it at a conference in Bochum at the beginning of June: “Today, software is simply part of the product. You can’t delegate that.” According to Diess, like a smartphone, cars now also have to be constantly updated and adapted to the user.
The problem: the development of the software is lagging, and individual Cariad programs are not compatible with each other. The group had already pumped billions into the project. The supervisory board therefore gave Diess an ultimatum: Diess should present solutions to the disaster by July.
It is not yet known whether the problems with Cariad were ultimately the impetus that caused Diess’ boss to tip over. VW announced on Friday that the decision to resign from Diess was “mutual”. In any case, the head of the supervisory board, Hans Dieter Pötsch, thanked Diess again and confirmed that Diess “did significantly promote the transformation both during his time as CEO of the Volkswagen brand and of the group”.
Prime Minister Weil also paid tribute to the work of the VW boss, as did IG Metall boss Jörg Hofmann and head of the works council Cavallo – with the latter two making it clear again that Volkswagen should continue to play a “social role model” and maintain the company’s goal of securing jobs.
However, Volkswagen shareholders were less enthusiastic. After all, Diess helped the VW share regain its former glory after the price collapse during the diesel crisis. In after-hours trading before the weekend, the share slipped deeper into the red after an already meager trading day and recently lost around 2.5 percent.
