VW CEO Diess ousted after tumultuous tenure, Porsche Blume to succeed

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  • Porsche CEO Blume to take charge of Volkswagen from September 1
  • The Porsche and Piech families were behind the move – sources
  • Diess ousted after multiple clashes with unions over strategy

BERLIN, July 22 (Reuters) – Porsche CEO Oliver Blume will succeed Herbert Diess as Volkswagen CEO (VOWG_p.DE), the carmaker announced on Friday after a supervisory board vote forced Diess to step down from his four-year term. tenure following a series of missteps in communication strategy and style.

Sources with knowledge of the matter said the Porsche and Piech families, which hold more than half the voting rights and a 31.4% stake in Volkswagen, have been pushing for a change at the helm.

“Diess was incorrigible. He changed Volkswagen dramatically – for the better. But his communication was miserable,” said a source, asking not to be named.

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Blume will take over from September 1, retaining his position as CEO of Porsche alongside his responsibilities in the news – “including in the event of a possible IPO”, according to a statement.

The 54-year-old has held many positions in the Volkswagen empire, from trainee at Audi to head of production at the Wolfsburg headquarters to head of production and logistics at Porsche from 2009 and CEO from of 2013.

His latest challenge is to lead the company’s efforts to go public as it raises funds to switch to electric sports cars.

The dual role at the helm of the two companies could “aggravate a situation of poor governance”, warned analyst Daniel Roeska of Bernstein Research. “We don’t think investors will like CEO dilution…especially if the IPO was meant to create more independence from the Volkswagen Group,” he said.

Volkswagen executives have eyed a possible fourth-quarter Porsche IPO as a way to fund its revamp as an electrification-focused automaker spanning software, batteries and cars, though poor market conditions mean that a listing could yield billions less than originally expected. Read more

“I know Blume has always been pushing for the IPO as hard as ever. So don’t think they’re going to back down,” a source familiar with IPO preparations said.

Diess’s ousting was also tied to his troubles heading the software unit at carmaker Cariad, a source familiar with the matter said, set up on his watch but far over budget and years behind on the objectives of launching a new software platform.

Diess’s future at Volkswagen has been repeatedly thrown into doubt, most recently in the fall of last year after he said a poorly managed transition to electrification could cost the automaker more than 30,000 jobs. . He was also lambasted for his frequent public warnings that Volkswagen was falling behind Tesla.

While Diess was seen as taking an investor-led approach, cutting costs and focusing on electrification, his leadership instability ultimately weighed on Volkswagen’s market value, which has been falling since the start of 2021. .

Workers’ council leader Daniela Cavallo had warned that support for Diess’ contract extension would depend on his ability to keep Volkswagen at the forefront of Europe’s car industry.

Joerg Hofmann, chairman of Germany’s strongest trade union, IG Metall, and deputy chairman of the Volkswagen supervisory board, said: “The momentum for change in the automotive industry is enormous… The decisions taken today today will allow us to maintain the rhythm and exploit the lead we have dug.”

In Europe, Volkswagen leads electric vehicle (EV) sales with a market share of around 25% compared to 13% for Tesla.

But it’s unclear whether it will remain in the top spot, with its production times for an EV currently three times longer than Tesla’s and a new electric-only factory not expected to open until 2026.

Listing the automaker’s achievements this year so far in a LinkedIn post on Friday ahead of his departure announcement, Diess said: “After a really stressful first half of 2022, many of us are looking forward to a summer break. well deserved.”

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Reporting by Victoria Waldersee, Tom Sims, Jan Schwartz; additional reporting by Ben Klayman, Emma-Victoria Farr; Editing by Louise Heavens, Elaine Hardcastle and Marguerita Choy

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