Key takeaways from VW's wild week
If Volkswagen wanted to explain why it just reorganized itself into brand groups that supposedly will better drive forward the company's transformation process, then they did a poor job of it. But there were some key takeaways from Friday’s press conference that answered other open questions including why Matthias Mueller was dismissed from his post as CEO.
Chairman Hans Dieter Poetsch went out of his way to praise the accomplishments of Mueller, who steered the company out of its greatest crisis ever. Poetsch indicated, however, that the company’s stakeholders could all agree on one thing: They wanted a leadership team young enough to still be around when the consequences of their decisions are felt in the future.
With Mueller nearing 65 and planning to step down when his contract expired in 2020, the whole VW supervisory board saw the need to make a change sooner rather than later, especially as the 59-year-old Herbert Diess is not getting any younger. If not now, when the company is strong with a record annual underlying profit, then when?
Another takeaway is that it appears Audi -- the sole member of the newly formed Premium brand group -- has been downgraded in the process. Diess effectively told reporters that Audi's job is to worry once more about how to surpass Mercedes-Benz and BMW to become the world's No. 1 selling premium automaker. This is unlikely to go down well in Ingolstadt, which was proud of owning all the group’s Italian units: Lamborghini, Ducati and Italdesign.
The other losers from VW's shakeup are Mueller’s senior management team. Hans Gerd Bode, head of group communications, wasn’t on stage to lead the press conference and will likely be offered a severance package. Diess also repeatedly referred to Mueller’s appointee as Chief Digital Officer, Johann Jungwirth, in the past tense when asked about his future role. “He was good for us (…) he put a lot of things in motion.” It would be surprising if Jungwirth is still around in a month, and it also appears crystal clear that Ulrich Eichhorn and Fred Kappler’s roles as head of group r&d and sales, respectively, will also change.
Meanwhile, Porsche’s standing has improved. Oliver Blume, the automaker's 49-year old CEO, has been repeatedly tipped as a top candidate to eventually become head of the group. Now he has much more of a chance to prepare for this role. Not only does he officially join the group’s board, but he will run the Super Premium brand group with Bentley, Bugatti and Lamborghini as well as head up group production for nearly 11 million vehicles.
Going forward, however, power appears to be highly concentrated in the hands of Diess in a way that hasn’t been the case since the days of former patriarch Ferdinand Piech. Diess will, for example, have direct responsibility for five members that make up the company's Value brand group: VW, Skoda, Seat, VW commercial vans and mobility services Moia.
Under ex-CEO Bernd Pischetsrieder, for example, Volkswagen had a VW Brand Group run by Wolfgang Bernhard. By comparison, Martin Winterkorn did away with the brand groups when he took over as CEO but chose to assume responsibility for the VW brand personally. Diess now unites these leadership models as he is now CEO of the VW Group, the Value brand group and the VW brand.
Mueller by comparison relinquished his job as Porsche CEO when he took over at VW Group boss. He saw the wisdom in focusing only on how to strategically extract the most synergies across the group’s stable of 13 brands -- a model that has clearly worked best given the sprawling size of the company with 640,000 employees worldwide. Roadmaps were created to chart a course to electrify the group’s entire model range, but decisions about what these specific models might be were left to VW, Audi and so on.
While Diess retains his role as head of the VW brand, he will have a top lieutenant running much of the day-to-day business soon. “There will be a chief operating officer appointed in the very foreseeable future that assumes responsibility for a large part of the business, a right hand man for Dr. Diess so to speak,” Chairman Hans Dieter Poetsch told reporters.
Perhaps this return to a stronger CEO at the top is a reflection of the need to have someone as ambitious and self-assured as Diess at the helm to replace the gap left behind when Piech resigned from the board. Especially in an environment as uncertain as today’s.
You can reach Christiaan Hetzner at email@example.com.