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VW CEO: The criticism of Herbert Diess does not stop

VW CEO: The criticism of Herbert Diess does not stop
Written by insideindyhomes

Herbert Diess broadcasts on all channels. The CEO of Volkswagen appears on Twitter with Amazon founder Jeff Bezos and the new e-model ID Buzz. On Linked-in you can see him driving through Munich in an autonomously driving prototype. In the “60 Minutes” format of the American television channel CBS, it appears at prime time, and at the Wolfsburg headquarters, it meets citizens for a conversation in a living room atmosphere – broadcast live on YouTube. He is always the world explainer who recognizes risks early and tackles problems with determination.

The public appearances contradict the growing difficulties in the group and the narrowly defined task on which Diess should actually concentrate. After a hard argument with the works council in the fall, he had to give up responsibilities and thus influence. He should now primarily take care of the Cariad software division, which is struggling with delays and is causing entire model launches to falter. He compensates for part of this loss of power with a strong presence in social networks and media, where he tries to set broad, strategic lines. This leaves VW with a dysfunctional leadership, and that in a phase that is critical for the group.

situation is fragile

At first glance, things are not going badly for Europe’s largest automaker. Like BMW and Mercedes, VW is also making billions in profits despite the Ukraine war, raw materials crisis and supply chain chaos. However, the situation is fragile and characterized by special effects. The chip crisis is reducing the supply of new cars. As a result, manufacturers hardly have to grant discounts. Book profits from hedging transactions against fluctuating raw material prices also artificially inflate the result. Business in China is worrying. New Covid restrictions, fear of political tensions and a weak start of new e-models raise the question of whether VW can still work successfully there in the future.

When the shareholders meet for the general meeting on Thursday, such dangers will dominate the debate, also because the share price is disappointing. After some ups and downs, it is listed at 144 euros, a fifth below the value when Diess took office four years ago. Corona and uncertainty caused by the war are weighing on the entire industry, but many competitors are showing more resilience on the stock exchange, not to mention Tesla’s soaring. Diess’ management style plays a role. He doesn’t manage to get the team behind him. He divides, provokes and tends to take action, an impression that is reinforced by his social media channels, which are used by a large team.

This came to light in the autumn when he almost provoked his expulsion with scenarios about the loss of 30,000 jobs in Wolfsburg. Since then, peace has prevailed outwardly, but internally the conflicts continue to smolder. At the same time, the Management Board seems inefficient, also because of its size. To contain Diess, it was expanded from eight to twelve members and now appears split into factions. This makes little effort to bridge the contradictions. Instead, he keeps fueling new debates, most recently about renaming the company an artificial name based on the model of rival Stellantis. The works council and the state of Lower Saxony, which is involved in VW, immediately accepted the initiative.


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For detailed view

The Porsche and Piëch families continue to support him

In the face of such caprioles, the support of the capital market has shrunk. He saw Diess as a beacon of hope to make VW more efficient and to reduce the influence of the employee bank, which international investors perceive as a brake pad. In the meantime, however, many analysts no longer see Diess as part of the solution, but as part of the problem. They are tired of the power struggles, also because they have done little to solve problems in the group.

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