This is Friday’s surprise. In a laconic press release, and without warning, the supervisory board of Volkswagen “introduces a generational change and thanks Herbert Diess for his great achievements in the transformation of the Group”. Thanks and fair winds.
It is a steep approach for the world’s leading manufacturer, but also the leading German company, with 250 billion euros in annual turnover and a workforce of 660,000 employees. A sudden procedure? This is exactly what the shareholders’ representatives and the CEO’s staff are mocking for showing him the way.
North vs. South
It is that the man is a little authoritarian. “Actually, he’s a Bavarian”, explained an executive at the house. One way to describe the uncompromising nature of Diess can be today, if one believes in this white collar, in earth from southern Germany. And at Volkswagen we, by tradition, are from the North where the management can be more horizontal, made in years of negotiations, unlike the south and vertical management. In addition, Oliver Blume who currently leads Porsche, and who replaced the outgoing CEO from Braunschweig, in Lower Saxony, in the northwest of Germany. But Diess was not the first authoritarian boss at home and the oldest still remembers the strong character of VW’s emblematic boss Ferdinand Piech.
But unlike the strong character of his distant predecessor, not revealed externally, the authoritarianism of Diess, known internally since he arrived at the head of VW in 2018, was revealed publicly. Two years after his arrival, in a vitriolic LinkeDin post, he criticized the severity of the group, which was criticized “the old encrusted structures, especially the headquarters of the Volfsburg group” which he did not break. One can easily imagine the emotion that these sentences, hit by sulfate and read all over the world, aroused among the executives of the house.
However, the institution that appointed him, the same board of directors that fired him today, knows his CV. He knew he was studying engineering in Munich. He knows that he spent 19 years at BMW in the same city, and he knows that the former boss of the house of VW, Martin Winterkorn, called him to his side, mainly because of his authoritarian profile with the purpose of cleaning, with a mission to cost-killer : reduce costs by 5 billion in two years.
He was successful and the same board of directors named him CEO in 2018, on the strength of his methods. “brutal”. It is up to him to tip the big team into a new era: that of electricity. It is up to him to make the biggest change in VW’s history and take the company’s 660,000 people with him. Because Diess is a fan of watts. He chose to invest almost 70 billion and there is no question of delay, he wants to continue a forced march. His role model is Elon Musk, and he wants to overtake Tesla in electric car sales volumes by 2025.
An electric fan
But unlike Musk at Tesla, Diess is not at home in the VW group. He cannot act as he pleases as the owner, even in part, of the group. Therefore, if he has the absolution of the board of directors, his way of doing (and iron) will not please the lower floor who is reluctant. The transition to all-electric is scary, the methods to achieve it are also. Especially as the cars’ electronic problems of the Diess era piled up, like this messy start of the ID3. Until the last break, it was ratified on Friday.
Inside, and among other European manufacturers, we also suspect that Hebert Diess, and his cult for electricity, who favored the decision of the European Parliament in June, approving the end of the heat engine in 2035 . Because when the boss of the world The main manufacturer declared himself ready to end a little oil, we listened to him. There followed an implosion of the ACEA (Association of European Automobile Manufacturers) where all the brands meet and, in this case, where no one seems to agree with the behavior to be brought to Brussels and face the deadline . Apparently Carlos Tavarès and Herbert Diess don’t spend their holidays together. A few days after the vote in Parliament, the head of Stellantis left the association with a bang, soon followed by Volvo.
This sparked rivalry within and among its European competitors
Faced with multiple injuries, both internal and external, Diess’s position became untenable and his exit was inevitable. The board finally fell under the pressure. But this rapid exit poses the question that is currently shaking the entire automotive industry: can the massive change required be smooth? We know the social damage that occurs at all levels, from the chain operator to the CEO through middle management. Suddenly, the earthquake going on at VW could be followed by other tremors, in other brands. On the side of Volkswagen, will the arrival of Olivier Blume, the north of the road to a successful change from Porsche, allow the whole group to succeed smoothly? To find out, we have to wait a few years, but the answer will be given before 2035.