After four years in the job, Volkswagen CEO Herbert Diess was given a seal of approval by Volkswagen with a contract extension just last year. Roll on 2022 and Volkswagen sacked Diess during his holiday. The CEO was seemingly unaware of what was happening behind the scenes. So what went suddenly wrong for Diess? Why sack him now? There is a lot of media speculation with sources claiming to be close to or familiar with the matter. This is the mainstream media poking their wet fingers in the air and making up redundant speculation.
Diess was the catalyst behind Volkswagen’s $52BN shift to electric cars. However, the Volkswagen Supervisory Board, which represents key stakeholders in VW, was not too happy with Diess’s apparent all-or-nothing switch to electric vehicles. Volkswagen prefers a dual strategy, one that incorporates ICE-powered cars and electric cars.
The Volkswagen Supervisory board was also unhappy with the sales slump in China. reports also suggest that Diess was difficult to work with, however, we believe the latter is character assassination easily believed by gullible journalists. Diess did clash with VW’s Union. This is probably where his troubles began.
The Porsche-Piech family is the largest shareholder of Volkswagen and the VW Union is also an influential member of the Supervisory Board. Being dismissive of the union was not a good idea on Diess’s behalf. The union complained of a botched software rollout by placing the blame on Diess. This had a knock-on effect on VW’s brand portfolio.
Diess was also criticized for not catering to local consumer preferences for the Chinese market, such as including in-car karaoke machines. This, say some, caused sales of VW’s electric ID range to stall. Diess also made a number of public gaffes which embarrassed the Supervisory Board.
Diess apparently said he was unaware of internment camps in China, said Europe should negotiate peace with Russia over the Ukraine war and apologized for using the phrase “EBIT macht frei” at a company event, a reference to profit incentives that appeared to echo a Nazi slogan.
Whatever the reason for his dismissal, do not pity Diess, he was earning around $12M USD per year for his role as the VW CEO. And his severance package will be equally as well renumarated. And he is good friends with Elon Musk. Volkswagen already had a replacement lined up, Oliver Blume.
Blume, the current CEO of Porsche, is a trusted favorite among the Porsche-Piech family. Blume oversaw the successful rollout of the electric Taycan and will retain his position as the CEO of Porsche. Being the CEO of VW is both a curse and a blessing, the tenure is short-lived but personally rewarding.
