It’s September and that means Herbert Diess has stepped aside as CEO of Volkswagen Group and Oliver Blume has stepped into the corner office of the executive suite in his place. Blume will continue in his position as head of the Porsche brand as well.
In a press release, Volkswagen said, “The Group Board of Management of Volkswagen AG is being streamlined and responsibilities will be reallocated. The new Chairman of the Board of Management, Oliver Blume, will focus on strategy, quality, design and the software subsidiary CARIAD.”
“In recent years, the Supervisory Board and the Board of Management have set the right strategic course by moving in the direction of electromobility and software. Now it’s time to implement the initiated measures with a streamlined Group management. For this purpose, the complexity on the Group Board of Management will be reduced and the focus sharpened,” explained the Chairman of the Supervisory Board, Hans Dieter Pötsch, and added: “Together with an outstanding team on the Board of Management and the Extended Executive Committee, Oliver Blume will ensure that the Volkswagen Group continues to successfully and forcefully meet the challenges of the transformation.”
Blume said, “The interplay between the Group, brand groups and brands is key for the success of the Volkswagen Group. The brands will be given more business responsibility. The Group will define the objectives, establish the guardrails for operational implementation and provide synergies for the platforms and technologies. Internally, the brand groups will assume responsibility for reducing the complexity of the management.”
Behind The Happy Talk At Volkswagen
Large corporations are always streamlining procedures, reshuffling areas of responsibility, and looking for synergies, whatever that means. But the bottom line in this instance is that Diess ruffled too many feathers in his mission to drive Volkswagen out of the chaos that resulted from its diesel emissions scandal and propel it into the electric vehicle future. His downfall started with his failure to pay adequate attention to the concerns of Volkswagen workers and picked up speed when his management style rubbed too many people the wrong way.
The crux of the problem — the rock upon which his illustrious career foundered — was software. Diess insisted Volkswagen could create and manage its own software division in house. He formed the CARIAD subsidiary to do just that, but the results have been less than stellar. When production of the ID. 3 began in November of 2019, the cars were undriveable because the software platform was not yet completed.
Since then, there have been constant software issues and while Volkswagen has been struggling mightily to solve them, the solution often required owners to drive to their local dealer and take a seat in the waiting room while technicians installed new updates manually. Suffice to say, many owners were not pleased and the ripples from their complaints traveled all the way to the top of the organization.
Tesla is ultimately to blame for this. It introduced over-the-air updates with its first cars and they work perfectly most of the time. The difference is that Tesla was a tech company that built cars while Volkswagen built cars first and shoved the software in later. Diess wanted to do at least 60% of the software development in house the way Tesla does rather than relying on on outside suppliers.
According to Handelsblatt, Blume is much more open to partnership with companies like Continental and Bosch, on the theory that if there are systems available off the shelf, there is no need to reinvent the wheel. Now those companies will develop the so-called middleware that is the interface between a car’s software and hardware, Handelsblatt says, based on reports from industry sources.
A Bridge Over Troubled Waters
Oliver Blume is seen as more of a company man. He has been with Volkswagen most of his adult life and spearheaded the Mission-E electric car concept that became the Porsche Taycan. Diess was an outsider brought in from BMW, which caused some tensions within the company, especially from those who may have felt they were Volkswagen loyalists who were passed over for the position. Diess had a reputation for being autocratic while Blume is considered someone who places a higher value on collaboration and harmony between the various components of the far flung Volkswagen Group.
Blume is also an advocate for synthetic fuels, which may be one reason Porsche is expected to become a powertrain supplier to the Red Bull Formula One team in 2026 when that series transitions to new rules that require all competitors to use engines that run on synthetic fuels.
Some worry that Blume’s support for synfuels will mark a turn away from electrification, but he told a meeting of senior managers on his first day as Group CEO, “I am a fan of e-mobility and I stand by this path. We will keep the current pace and, where possible, increase it.” He added that synfuels may be appropriate for Porsche but that doesn’t mean they will be pursued by the other brands within Volkswagen Group.
Finding The Right Rhythm At Volkswagen
At that same meeting, Blume stressed that the Group must find the right rhythm for a stable transformation by defining and following through on a clear strategy, according to Autoblog, which says his presentation featured many references to the importance of teamwork and collaboration. Sources say Blume was chosen in part because he is seen as a calmer and more consensus driven leader than his predecessor, who was known for radical shifts in strategy and a single minded approach which at times angered the carmaker’s powerful workers council.
Diess is an unabashed admirer of Elon Musk and it can be said that both have similar management styles. There is no one factor that sealed Diess’ doom as head honcho at Volkswagen Group, but the drumbeat of negative comments about him accelerated after he invited Musk to address a senior management meeting via Zoom last year, a move that many company insiders saw as an insult to them. Things went downhill for Diess pretty quickly after that.
Volkswagen says its goal is to pass Tesla as a manufacturer of electric cars by 2025. It certainly knows a lot about mass producing automobiles, there’s no doubt about that. But it doesn’t know as much as Tesla does when it comes to making cars that are primarily computers on wheels. Oliver Blume may be a collaborator, a company man, and more touchy feely than Diess, but he will need to solve that part of the equation if he intends to stay in his new position for long.
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