VW Presidium postpones decision on CEO Diess

Contrary to the announcement, owners and controllers have not decided on the future of the VW boss. But that does not end the deep dispute. Herbert Diess wants to change the automaker profoundly.

What will become of Herbert Diess?

Dhe internal circles of power of the Volkswagen Supervisory Board did not decide on a contract extension for CEO Herbert Diess during its deliberations on Tuesday. The eight-member presidium had split up after deliberations in the evening, said a person familiar with the processes. Another person said that Diess had raised his concerns in the run-up to the meeting and asked the shareholders for support.

A contract extension was not up for debate. “The Bureau cannot be pushed to a decision, there is no rush,” said the insider. Details of the talks were initially not disclosed. Volkswagen did not comment. The Reuters news agency had previously reported from corporate circles that supervisory board chairman Hans Dieter Pötsch was looking for ways to avoid a leadership crisis. Should a compromise be found, it could be discussed in the next few days and a decision in the supervisory board next week.

According to insiders, after a grueling dispute with the works council, Diess demanded an early extension of his contract, which runs until 2023, as a vote of confidence that the supervisory board supported his course in the restructuring of the automaker. According to those in the know, the new conflict began because of his desire to fill key positions on the Group’s board of directors with managers with whom he believes he can convert Volkswagen into a technology group more quickly.

Volkswagen wants to position this more broadly

According to Diess’ vision, the group will offer not only electric cars, but also software for self-driving vehicles and digital services. While the goal is shared by the owners, many clash with Diess’ approach. People with knowledge of the situation reported that some members of the supervisory board had criticized the fact that the “highest employee of the group” was putting the owners under pressure with his demands.

The former BMW manager came to Volkswagen in mid-2015 – a few weeks before the diesel scandal was uncovered by the American environmental authorities – and has been driving the switch to electromobility ever since. Under his leadership as brand boss, the electrical construction kit MEB was created, on which the ID models developed by VW are based, with which the Wolfsburg-based company wants to overtake Tesla and become the largest electric car manufacturer.

Experts are already expecting this in the coming year. The supervisory board recently provided Diess with a huge budget of 73 billion euros for the coming years. By 2025, the world’s largest car manufacturer is investing 35 billion euros in new e-cars and the retrofitting of the factories, 2 billion more than was planned in the previous plan. Diess has made it clear several times that he wants to break open what he sees as the encrusted structures and make Volkswagen more flexible in order to survive the transformation of the industry.

Diess sees encrusted structures in Wolfsburg

In a post published on LinkedIn, the 62-year-old manager admitted that he had succeeded in doing this in many places, but not in some, “especially not yet at our corporate headquarters in Wolfsburg”. The power of employee representation is particularly pronounced there. To make matters worse this year is the Corona crisis, as a result of which sales have collapsed. In addition to the costs of the renovation, this increases the pressure for a new savings program.

In doing so, Diess does not avoid any conflict: In a greeting on the occasion of the ceremony to mark the 75th anniversary of co-determination at Volkswagen, he warned last week that bold decisions would have to be made in the coming years in order to secure the Group with its more than 600,000 jobs. “Increases in efficiency are necessary and should not be underestimated for the continued existence of companies,” he explained. Due to the majority at Volkswagen, the state of Lower Saxony, as a major shareholder, and the works council play a particularly important role in decision-making – this also applies to filling top positions.

In the coming year, the successor to Group CFO Frank Witter, who wants to leave in June for family reasons, has to be arranged. According to insiders, Diess favors Arno Antlitz, currently CFO at the Audi subsidiary, for Witter’s successor. The works council rejects Antlitz. During his time as CFO of the VW brand, the employee representatives had repeatedly clashed with him.

In addition, since Stefan Sommer’s withdrawal, the procurement department has to be filled, for which Witter has been provisionally responsible since early summer. Murat Aksel, who has previously held this position at the VW brand, is under discussion for the area, according to corporate circles. In addition, a merger of the production and components department with Thomas Schmall at the top, who has previously headed the components division, is being discussed.

According to insiders, the employees insist on a package solution in which they want to contribute their ideas. Works council chief Bernd Osterloh recently stated that he was confident that the supervisory board – “when the time comes – will make the right choice in order to shape the transformation of the next few years with the right candidates”.