Volkswagen CEO sacked get out of class 3 years early: what did he do wrong to drive tram sales up 10 times?

Goodbye, Diess.

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Source: car stuff (ID: chedongxi)

Volkswagen Group CEO Herbert Diess sacked!

On July 22, German time, the Volkswagen Group held a meeting of the group’s supervisory board, announcing that on September 1, group CEO Herbert Diess will officially resign, and Porsche CEO Oliver Blum will officially serve as the group’s new CEO. In addition, Oliver Bloom will continue to serve as Porsche CEO.

Diess joined Volkswagen in 2015. At that time, Volkswagen was in a dire “emission gate”. At that time, Diess was a powerful medicine for Volkswagen – drastic reduction of costs, helping Volkswagen turn a corner, and successfully becoming the group CEO.

But it is precisely because Diess is too aggressive in controlling costs-more than one layoff speech has made Diess a “poison” in the eyes of the union. At the end of last year, the Volkswagen Supervisory Board directly set up an adjustment committee to discuss his departure and retention.

Although Didis temporarily retained the position of group CEO at that time, his management rights were greatly weakened, and he no longer served as the head of the Volkswagen brand, but was assigned to be in charge of Volkswagen’s software business.

The latest news shows that the research and development process of the Volkswagen Group’s software department is seriously behind schedule, which has led to the delayed release of electric vehicles from several sub-brands such as Audi and Porsche. Volkswagen is at the crux of the intelligent transformation at this time.

Diess has repeatedly emphasized the importance of software and is also planning new strategies. Just yesterday, Diess also posted a blog to express his strategic interpretation of the Chinese market, and there is no sign of his upcoming resignation.

However, just a few hours later, the Volkswagen Group announced the news of Diess’ departure. This sudden decision will inevitably affect the implementation of many plans within the group. Will Volkswagen’s electrification reform proceed smoothly?

01.

The Group expresses gratitude to Diess after leaving office 3 years ahead of schedule

Diess resigned, there are still three years left before the contract time, and the Diess era of the Volkswagen Group has come to an end.

Hans Dieter Pötsch, Chairman of the Supervisory Board of the Volkswagen Group, thanked Herbert Diess on behalf of the entire Board of Directors: “Herbert Diess played a key role in driving the transformation of the company during his tenure as CEO of the Volkswagen Passenger Cars brand and Group CEO. Diess He has demonstrated an impressive ability to transform the group, not only leading the company through extremely turbulent times, but also implementing an entirely new strategy.”

From the supervisory board’s point of view, Herbert Diess has come up with a number of innovative product ideas, redesigned the product portfolio and established a strategy with a focus on electric mobility.

At the meeting, the Supervisory Board also decided that Group Chief Financial Officer Arno Antlitz will also serve as Chief Operating Officer to assist new CEO Oliver Bloom in day-to-day operations.

Oliver Bloom joined the Volkswagen Group in 1994 and has since held executive positions at brands including Audi, Seat, Volkswagen and Porsche. He has been CEO of Porsche since 2015 and a member of the Group Management Board since 2018.

From a financial, technical and cultural standpoint, Porsche has been a huge success for the seventh year in a row, according to the Volkswagen Group. In 2021, Porsche has just achieved the best annual sales of 300,000 vehicles in history, an increase of 11% year-on-year; although affected by the lack of cores, it has not stopped Porsche’s double harvest of sales and profits, becoming the most profitable Volkswagen Group. One of the brands, perhaps the supervisory board saw Bloom’s outstanding achievements at Porsche.

Hans Dieter Pötsch, Chairman of the Supervisory Board, said that from the Supervisory Board’s point of view, he is now the right person to lead the group and further increase its customer focus as well as its brand and product positioning.

02.

During the tenure, the sales and profits of Volkswagen electric vehicles increased steadily

Since Diess became the CEO of the Volkswagen brand in 2015, Volkswagen has launched a number of electric vehicles including the ID. series, and the sales of electric vehicles have continued to increase. In 2019, Volkswagen’s electric vehicle sales exceeded 100,000 units, 420,000 units in 2020, and 760,000 units in 2021.

It can be said that under the leadership of Diess, Volkswagen’s electrification transformation is still quite fruitful.

The rise in electric vehicle sales also boosted net profit. According to public data, the Volkswagen Group’s net loss in 2015 was US$1.756 billion (approximately RMB 11.855 billion). The annual net profit continued to expand, and the net profit in 2016 turned positive, and exceeded 12 billion US dollars (approximately RMB 81 billion) in 2017, and exceeded 17.5 billion US dollars (approximately RMB 118.1 billion) in 2021. highest inside.

While electric vehicle sales have grown, the group’s overall vehicle sales momentum has been different.

When Diess first joined the Volkswagen Group in 2015, the Volkswagen Group sold 9.93 million vehicles worldwide. Since then, the sales volume of the Group’s automobiles has continued to grow for four consecutive years. In 2016, the sales volume exceeded 10 million, reaching 10.31 million; in 2017, the global sales volume of Volkswagen Group was 1,070;

But starting in 2020, the Volkswagen Group’s car sales fell to just 9.3 million for the full year, before hitting a new low of 8.88 million in 2021.

According to Yahoo Finance, from 2013 to 2015, the stock price of Volkswagen Group did not change much, and it basically remained at around 30 euros (about 207 yuan).

In April 2015, Volkswagen’s stock price reached a high point, with the highest unit price per share of 49.595 euros (about 342 yuan). However, after the dieselgate incident broke out in September of that year, Volkswagen’s single share price fell to around 20 euros (about 138 yuan). Since then, Volkswagen’s share price has shown a downward trend.

After Diess became the CEO of the Volkswagen brand, Volkswagen’s share price rebounded slightly. From 2016 to 2020, the unit price per share hovered at 20 to 30 euros (about 138 to 207 yuan), and by 2021, Volkswagen’s share price fell below 20 euros (about 138 yuan), the latest unit price is 13.18 euros (about 90.84 yuan).

Diess, 63, was born in Munich, Germany in 1958. He started his career at Bosch and joined BMW in 1996. In 2003, Diess became head of BMW Motorrad, and in 2007 was promoted to director of the BMW Group, responsible for purchasing and suppliers. During this period, he implemented an austerity strategy that saved BMW hundreds of millions of euros.

With the successful experience of cutting costs at BMW, in 2015, Diess became the CEO of the Volkswagen brand and was promoted to the CEO of the Volkswagen Group.

Diess’s contract with the Volkswagen Group was supposed to last until April next year, but the Volkswagen Group’s board of directors had previously approved Diess’ application for an extension of his term until October 2025.

With the sudden announcement of his departure this time, Diess’ term of office has ended three years earlier. It is still unknown whether the strategy of the Volkswagen Group will undergo major changes, but there is a high probability that there will be changes.

03.

The drastic reform had planned to lay off 30,000 people

Looking back at the 7 years in Volkswagen, Diess has been at the forefront of the reform of the Volkswagen Group.

In 2015, Diess joined the team when Volkswagen was deeply involved in the “emission gate” crisis. He played his role as a “cost killer” when he worked in the BMW Group, helping Volkswagen reduce costs and tide over the crisis smoothly.

After Diess officially became the CEO of the group in 2018, he carried out reforms in a drastic manner, and even touched the red line of the interests of Volkswagen executives again and again.

At present, the Volkswagen Group Supervisory Board consists of 20 members, who belong to the Borscher family, the Piech family, the Lower Saxony state government, and the Labour Council, with great power. And according to Germany’s “Mitbestimmungs” system after World War II, employees of enterprises can jointly decide important corporate decisions by their elected representatives, employers and management. Although the supervisory board does not participate in the day-to-day operations of the company, it has veto power on many matters. Labor representatives currently occupy half of the 20 seats on the Volkswagen Group Supervisory Board, which approves key strategic decisions.

At the end of last year, Diess was nearly ousted by VW’s supervisory board, and at the VW supervisory board meeting in October last year, he put the layoff plan on the table again. Diess said that if Volkswagen’s electrification transition is too slow, it may need to cut 30,000 jobs to resolve the cost crisis. This brought the relationship between Diess and the Volkswagen union to a freezing point. At that time, there was also news that Diess’s position was not guaranteed.

After that, the Volkswagen Supervisory Board set up an adjustment committee to discuss Diess’s departure and retention. As a result of the discussions, Diess continued to serve as CEO, but his management rights were greatly weakened, and he was removed from the position of CEO of the Volkswagen brand and turned to focus on the group’s strategic development and the Cariad software division.

At the beginning of this year, Diess talked about the unique governance structure of Volkswagen Group in an interview with foreign media, saying that this makes his job different from that of most CEOs in the auto industry.

“It’s complex, requires more coordination and a lot of discussion, and the group structure doesn’t allow for arbitrary decisions,” Diess said.

04.

Conclusion: Mass transition is not easy

The Volkswagen Group has 100 production bases in 27 countries and employs more than 600,000 people around the world. Behind the Volkswagen Group, there are thousands of huge supply chains developed based on internal combustion engines and gearboxes, and this huge supply chain has already supported a large number of vested interests.

With its deep accumulation in the traditional automobile market, Volkswagen has already grown into a huge ship. Now facing the new era of electrification, where should Volkswagen go?

To make the Volkswagen transition smoothly, it is necessary to significantly cut costs, but Diess’s efforts did not get the full support of the Supervisory Board and had to leave.

In the future, where the development of the Volkswagen Group will go, it depends on the courage of the new leader.

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