Meet the new boss of post-Dieselgate VW
Sales may be strong but the stench of Dieselgate still lingers over VW. That needs to change.
VOLKSWAGEN SHOCKED the industry and investors by installing a new group chief executive, Herbert Diess, in mid-April. By VW standards, he’s an outsider, having left BMW to take over the Volkswagen brand in July 2015 – just two months before the diesel emissions scandal engulfed the company. Within days of VW’s flouting of emissions standards becoming public knowledge, CEO Martin Winterkorn was forced to resign – and then-Porsche chief Matthias Müller stepped up to be caretaker group leader.
His reign lasted two-and-a-half years, and VW insiders hint that Müller didn’t have much notice of his time being up. He’d announced record earnings, and expected to continue in the role into 2019. But union leaders and political representatives from the state of Lower Saxony, who have significant clout on Volkswagen’s supervisory board, were demanding change.
The 64-year-old chief was accused of letting some of the group’s brands run on too loose a leash – with Skoda intruding on VW turf, for instance. And despite outlining a plan for VW to embrace electrification, some key stakeholders complained of a lack of clear strategic targets group-wide. Another faction on the supervisory board, the four Porsche and Piëch family members, disagreed with a proposal to sell off Ducati. And chief shop steward Bernd Osterloh never stopped calling for a tougher CEO to fight for worker job security.
Toughness goes to the core of engineer Diess, whose cost-cutting ways as BMW’s chief of procurement put him into conflict with parts suppliers. Ferdinand Piëch recruited him to boost efficiency at VW, and Diess immediately clashed with Osterloh. But soon Diess was finding ways to forge alliances and wring concessions: agreeing a €3.7bn cost-saving plan with the unions in early 2017, and safeguarding VW jobs through to 2025 in return for the workers embracing the shift to e-mobility. Meanwhile, Müller’s handling of Dieselgate was criticised as clumsy. He seemed too willing to turn his back on the diesel engine, where others wanted to emphasise its benefits. He all too often let it be known that he’d been happier at Porsche.
Diess – whose CV also includes running a Bosch plant, and who owns a small tapas bar in Munich – seems more comfortable addressing the big picture than Müller. He comes across as a more resolute decision-maker who’s willing to take risks. And now he’s getting the credit for driving forward the electrification strategy, underpinned by the electric MEB architecture. One trait Diess does share with Müller, however, is his refusal to compensate European owners of dodgy diesels.
Now it’s the turn of Diess to try to re-engineer the VW Group and its sprawling brand portfolio, and project the cultural change that will help consign Dieselgate to history. The 59-year-old will keep hold of the VW brand reins and run the new volume car group which also includes Skoda and Seat, as well as indirectly oversee Audi as chairman of its supervisory board. A super-premium group – of Porsche, Lamborghini, Bugatti and Bentley – will also need to find synergies and bed down. Diess has bet big on electromobility and expects 2020 to be the year volumes soar. If demand rises slower and later, VW could have a problem. But the new CEO isn’t worried. ‘We’re on track,’ he says. ‘In Europe, MEB will help consolidate VW’s position as the top player in the volume segment.’ There’s growth in Latin America, the US and China – and that’s before VW introduces a new budget car to China in 2019.
‘Competence is not the issue here,’ says Diess, ‘but better coordination is.’
Diess comes across as a more resolute decision maker who’s willing to take risks
The outsider: exBMW man Herbert Diess’s relatively short time within VW means he’s not tainted by scandal