Herbert Diess sacked as CEO of Volkswagen

In the last hours, the news of the dismissal of Herbert Diess as executive director of the Volkswagen Group has jumped. A surprise considering the recent renewal of the manager until 2025, and that as of September 1 he will leave his position to the current head of Porsche, Oliver Blume.

Diess’s surprise departure marks the end of some bitter clashes that the Volkswagen boss had been having for some time with unions and other key interest groups in the company. An internal struggle where the great changes that Diess proposed, such as the transformation strategy and cost cuts, have raised many blisters within the council that has ended its mandate prematurely.

The reasons for this exit can be several. On the one hand, in addition to the clashes with unions and with some parts of the shareholders, there was, according to the German press, poor communication that Mr. Diess. Some even describe it as miserable, of his approach to Tesla’s philosophy that was reflected in several meetings with Elon Musk and above all, the constant praise of Diess himself for Tesla’s dynamics and strategy. Something that, according to the German press, has hurt a lot within the most conservative parts of the group’s council.

And it is that few are those who question the strategy followed where it has gone from the diesel gate scandal, which broke out just in the year he came to command, to be one of the brands with the most investment in electric mobility on the planet. But this has not been enough.

The sales have not accompanied an investment that is still in the development phase and that will take a few years before it bears fruit. Development of the ranges and the production of batteries that do not hide the highly improvable sales figures of an industrial and economic giant that is seeing how other brands also surpass it in volume.

For example, in the first six months of the year, Tesla has been a great reference globally, increasing its distance. It is followed by BYD, the also Chinese SGMW (SAIC-GM-Wuling), and BMW in fourth place. It is not until the fifth in we find Volkswagen, which as we see is placed behind its German rival and with Mercedes hot on its heels.

Herbert Diess

A position that also depends almost exclusively on one model, the ID.4, which occupies the tenth position in total sales worldwide, with an ID.3 that has disappeared from the sales listings, even in Europe, its great bastion, where it has sunk to 12th place in the year accumulated, being surpassed by the Audi Q4 e-Tron, the Peugeot e208, and the Renault ZOE, and of course, very far from the leaders. Tesla Model and Tesla Model 3.

The software is also another of the nails that have finished with Diess out of Volkswagen. A section that has choked Volkswagen, is the result of very careless management where in the beginning it has even been outsourced and treated as a secondary element. The result is the first generation of cars riddled with errors that have spoiled the experience and sentenced them at the image level.

A key aspect that the German group has understood its importance the hard way, and that they have tried to solve with a huge amount in their division that has had to be started up almost from scratch. A section called Cariad is also experiencing problems in completing the objectives set and for many, has possibly been one of the main reasons for the goodbye of Diess.

To try to finance the expansion of the electric range, and improve the software and digitization aspects, Volkswagen was preparing to go public with Porsche. An emergency solution selling the most profitable brand of the group, which for some has also had its effect. But curiously, Diess’s replacement at the helm of Volkswagen, Oliver Blume, current CEO of Porsche, is also in favor of this departure, so it would be strange if it were reversed.

It now remains to be seen what changes Blume will bring to Volkswagen. But it will not be easy to solve great challenges, such as the almost total collapse of sales in China, where local consumers are turning to Chinese brands, reversing what has been seen so far with cars with a combustion engine.

A competition that is now in Europe, and that will mean having to get the batteries both from the point of view of the image, as well as production, software, autonomous driving, but also segments to cover and prices.

It also remains to be seen what Diess will do once he splits with Volkswagen, with rumors mounting that he already has a deal with Tesla to fill the CEO role. Something that Elon Musk had been looking for for a long time to be able to focus on the work of the CEO.

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