In what is being described as a boardroom coup, Volkswagen named
Herbert Diess as
its CEO yesterday, abruptly ending the less-than-three-year reign of Matthias Müller, the executive who kept it running following the “Dieselgate” scandal, which the company refers to
as “the greatest challenge in its history.”
Diess is expected to oversee “sweeping changes” at the automaker, which also owns several other
brands including Audi and Porsche, the BBC reports
. "The carmaker said it will reorganize its 12 brands by creating six new vehicle
divisions and a special arm devoted to China, its largest market.” Details of the plan should emerge later today.
The ouster of Müller “follows slow
progress in reorganizing the group’s car brands, a key pillar of ‘Strategy 2025’ to transform Germany’s biggest car company into a leader in cleaner cars and to move on from
its diesel emissions scandal of 2015,” Reuters reports
. “For Volkswagen, it’s the biggest overhaul
since it became a multi-brand conglomerate under former chief executive Ferdinand Piech, a grandson of VW Beetle designer Ferdinand Porsche.”
“The move comes
nearly three years after Volkswagen admitted to rigging 11 million diesel-powered vehicles to cheat on emissions tests, sparking a large recall and criminal prosecutions, while costing the company
more than $25 billion in fines, penalties, consumer compensation and legal fees,” William Boston for the Wall Street Journal reminds us
Diess “quietly orchestrated a
boardroom coup while he was rebuilding the company’s namesake brand,” Boston writes in his lede.
Rumors of the move had been circulating for a few
“Sources close to VW suggest Müller’s possible departure has been engineered as part of a boardroom coup engineered by Hans Michel Piëch,
Wolfgang Porsche and Hans Dieter Pötsch,” Greg Kable reported
Tuesday. “Piëch and Porsche are VW board member
representatives from the families which together control more than 52% of Volkswagen Group shares. Pötsch is chairman of the VW supervisory board.”
Müller, 64, had a contract to run the company until 2020.
“Müller handled a difficult job competently. VW today is back to roughly the same financial
shape it was in just before the scandal broke in mid-2015, with a market capitalization of some $105 billion. Its share price has outperformed those of its peers. Last year it doubled profits and sold
a record 10.7 million vehicles, The Economist points out
. But “increasingly frustrated at
internal opposition to his efforts to change the way the company was run,” the unsigned article suggests, “he may be happy to go,”
Diess, 59 and
an engineer by training, “has one big advantage as he takes over as the chief executive,” Jack Ewing writes
for the New York Times
. “He is not a product of Wolfsburg, the carmaker’s base.
“As a relative newcomer to the company, a former BMW executive who joined only two months before an emissions scandal erupted, Diess is not associated with
the wrongdoing that continues to weigh heavily on the company’s image and finances, and that remains the subject of major criminal investigations by German and United States
Coups and upheaval seem to go with the territory at both the parent company and the VW nameplate.
Reflecting on the
unfolding emission scandal in late 2015, James B. Stewart wrote
the New York Times
: “Volkswagen’s recent history — a decades-long feud within the controlling Porsche family, a convoluted takeover battle and a boardroom coup — has
dominated the German financial pages and tabloids alike. This week, the German newspaper Süddeutsche Zeitung
compared Volkswagen’s governance to that of North Korea, adding that its
‘autocratic leadership style has long been out of date.' It said ‘a functioning corporate governance is missing.’”
Perhaps all the intrigue is
giving way to financial reality as the auto industry as a whole faces the dissolution of the business model that has driven it for a century.
“There have been
historic episodes where cost cutters have been brought in to sort out the namesake VW brand, but who then leave or are squeezed out before their work is really done,” Sanford Bernstein analyst
Max Warburton wrote in a note quoted
’s Christoph Rauwald. “Instead
of being squeezed out, he has been pushed upward, and has been made CEO. It’s a sign of real change at VW.”
They may not be Thinking Small, but they are
definitely Thinking Different.