Hot on the heels of news that Volkswagen Group (VW) CEO Herbert Diess would be leaving the company at the end of August 2022, just about four years after he took over in 2018, the people have asked a lot of questions, and the most pressing is why.
In this series of six articles, I will try to explain the reasons for the decision to push Herbert Diess out of the management of VW and why it was not a surprise at all.
Challenges
Diess carried out the conversion of the huge VW group (which has 12 brands), from internal combustion engines to battery electric vehicles. And it’s a gigantic undertaking, but essential for the survival of the automaker, which until a few years ago was the biggest in the world.
As such, he deserves recognition and respect for this initiated change, even if it is not yet known whether it will be successful or not.
When you change the course of a huge tanker like the Volkswagen Group, you should not confuse it with drifting in the new direction or even reaching the destination. Because when you change course, you don’t feel or see the change for a while, and that’s still the case with Volkswagen.
Stakeholders
Many parties are involved in VW’s decision-making process. And of course, each side has their own motivation and influence, so it always depends on who you ask why the CEO was forced out.
Each person involved in the decision will therefore give a different answer and reasons. But the momentum that develops can level many small decisions to a surprisingly timely breaking point.
At the crucial board meeting where the decisive decision was made, not only did a key stakeholder ask for his resignation, but other equally important people did not object to this request.
All of this resulted in a mutual agreement: those who did not oppose the vote also decided against him, based on their history with Herbert Diess.
Herbert Diess – Oliver Blume: an expected succession
As an outsider who has been analyzing Germany’s largest industrial company for a decade, I predicted long ago, and for good reason, that Herbert Diess would leave before his contract expired in 2025 and be replaced by Oliver Blume, CEO of Porsche.
It was not difficult to come to this conclusion, and it makes perfect sense, given the conditions in which Volkswagen operates. And this, although I believe that it will not help the company to continue its path towards sustainable transport, but rather hinder it.
The strategy of VW’s new CEO, Mr Blume, is to continue selling internal combustion engines and hybrids, as well as vehicles powered by synthetic fuels called “e-fuels”.
Undoubtedly, this will distract from the strategy devised by Herbert Diess, which was to fully embrace battery-powered electric vehicles. Such a return to the group’s initial strategy is not at all positive.
The future doesn’t look any brighter for Volkswagen without Herbert Diess. But we can concede that he was also debatable with him, as we will see later.