Report: Volkswagen to decide future of CEO Herbert Diess
Discussions ongoing over Diess's position following tensions with labour unions
The chairman of the Volkswagen Group board, Herbert Diess, will reportedly be told as soon as this weekend whether he will be kept on or let go after clashing with unions over the direction of the company.
According to Reuters (via Automotive News), citing two sources close to negotiations, a decision on Diess’s future is imminent, following the latest round of discussions last weekend.
Volkswagen, like other car makers, has been forced to make tough decisions concerning future investment and jobs to stay relevant in the face of global and particularly European shifts to electrification.
Diess has been vocal in the need to adapt to competition, particularly from Tesla, which is on the verge of opening a plant in Germany and now regularly tops premium best-seller charts with the Model 3. He angered Germany’s powerful unions in September when he said as many as 30,000 jobs could be under threat if the company were too slow in transitioning to electric propulsion.
Volkswagen has spent billions in expanding its line-up to include a range of EVs centered on its MEB platform. However, Diess has warned that jobs that exist today aren’t guaranteed in the future as the company spends more on software and streamlines its production process in a bid to make EVs both more competitive against the likes of Tesla and more affordable.
Diess is caught between the desire to present the company as agile and modern and the demands of the powerful works council, which has criticised him for not being more sensitive to the fears of Volkswagen Group workers in Germany, who number around 120,000.
Diess has direct experience of running plants from his days at BMW, when he oversaw the Mini factory in Oxford, but the current upheaval is proving tough to navigate even for experienced managers.
The shift to electrification and the move away from traditional jobs associated with internal combustion engines has triggered ruptures with German unions. For example, a right-wing organisation called Zentrum Automobil is winning increasing support within Porsche and Daimler workers in Stuttgart with its campaign to halt the shift to EVs and keep more traditional jobs in place.
Companies have been particularly conscious of the need to transition workers to news within the electromobility. For example, Daimler is switching its diesel plant in Berlin to making electric motors from newly purchased British company Yasa.
Diess could be protected by the fact that the Volkswagen Group is currently highly profitable as the chip shortage steers production towards higher-margin vehicles such as SUVs.
In a recent manager meeting, he accentuated the positive progress the company has made in a range of issues including union negotiation to boosting sales in China.
“You can see that my mood is very good, because we’ve made a lot of progress in the last few weeks,” Diess said in the speech, according to Reuters.
Diess took over as chairman of the Volkswagen Group in 2018 from Matthias Müller with the brief to transform the company after the lows of the Dieselgate scandal that broke in 2015.
Autocar has contacted Volkswagen for comment.
Nick Gibbs
