April 13, 2018, 06:50 / Auto

Volkswagen Group has changed its leader

Herbert Diess will replace Matthias Müller as CEO of the largest automaker Gennady Anisimov

Herbert Diess (left) will replace Matthias Müller (right) as CEO of the Volkswagen Group / Tannen Maury / EPA-EFE

Herbert Diess will replace Matthias Müller as CEO of the Volkswagen Group, the company announced. Diess, who previously headed the Volkswagen (VW) brand, takes office immediately after the decision was made on Thursday by Volkswagen's board of directors and supervisory board. Mueller leaves his post by mutual agreement of the parties, the message clarifies.

The automaker is also reorganizing divisions and optimizing the management of 12 brands. The group will create six new business units and spin off China as a separate region. It is the group's largest global market and sales country. VW will divide its car brands into three groups - mass (Volume), premium (Premium) and luxury (Super Premium). The company is going to prepare the truck and bus division (Truck & Bus) for corporatization, it said in a statement.

Porsche CEO Oliver Blume will join the board of the automaker. He will be in charge of the group's production. Diess, now 59, will be responsible for research and development on the board. Another board member, Audi CEO Rupert Stadler, will be responsible for group sales. Executives responsible for the brand groups will also assume group management responsibilities, the company said, without providing other details.

The Volkswagen brand will be headed by a top manager from BMW

Management

Chairman of the supervisory board Hans-Dieter Pötsch thanked Müller, calling his work “outstanding.” “He took over leadership in the fall of 2015 when the company faced the biggest challenge in its history,” Pötsch is quoted as saying in a company release.

VW replaced Müller after he failed to reform the group's portfolio of automotive brands, a key component of the company's strategic plan until 2025, writes Automotive News Europe (ANE). The plan would transform the company, which was caught in the 2015 diesel emissions scandal known as Dieselgate, into a leader in the production of environmentally friendly cars. “Diss is willing to withstand conflict, which is important for a company like Volkswagen to move forward,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, told Bloomberg. For the VW CEO, "conflict will be part of the program," he said.

A former BMW Group executive, Diess joined VW at the end of 2014, just months before Dieselgate, and promised from the outset to speed up the transition to new technologies while reining in costs. His project became much more urgent after the diesel scandal caused huge costs and changed the company's priorities.

After Diess moved to VW, many doubted that the newcomer would be able to get used to the complex internal politics of the automaker. But the lanky and cool-headed Bavarian was able to negotiate a deal with unions that cut up to 30,000 jobs and saved the company 3.7 billion euros ($4.6 billion). Consistently eliminating problems in the main division of the concern, Diess earned the trust of the Porsche-Piech family clan that controls the company, sources told Bloomberg .

Volkswagen brand will focus on producing electric vehicles

Auto/Cars

As head of purchasing at BMW, Diess played an important role during the financial crisis, reducing costs by more than 4 billion euros, recalls ANE. Then he became responsible for development. But in the competition for the position of CEO, he was surpassed by Harald Krueger, who was appointed in December 2014. This prompted Diess to move to Volkswagen.

“Diss is a man of action. He is VW's most suitable choice to lead the group in the next stage of transformation,” said Nord LB analyst Frank Schwoop.

Mueller, now 64, served as CEO for less than three years. When the diesel crisis began, he was CEO of Porsche and took over from his predecessor, Martin Winterkorn, who resigned.

Six months before the diesel scandal, in April 2015, Spiegel named Müller as a candidate to replace Winterkorn during a conflict between the then chairman of the VW supervisory board, Ferdinand Piëch, and the company’s management and other shareholders. Almighty, as it seemed at that time, Piech wanted to replace Winterkorn, who had disappointed him, as the CEO of Porsche. But soon, having lost the confrontation, Piekh resigned from his position in the company. In September, Muller nevertheless headed the concern, which was under a barrage of revelations and criticism and the threat of sanctions from the authorities of many countries. “Everything was fine at Porsche, but it was also my duty to help the company and take over leadership in a difficult situation,” Muller explained the decision in an interview with Vedomosti.

“My duty was to help the company”

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The timing of the leadership change seems somewhat counterintuitive - VW is on the rise financially and has retained its status as the world's number one auto group, Bloomberg notes. But Müller began to show signs of fatigue, appearing tense and irritable even in public. On the eve of the announcement of the change of CEO, Bloomberg sources said that changes in management were being carried out to fulfill the group’s long-term plans. As VW began to recover from the diesel scandal, the company decided to reconsider its future structure and decided to rationalize its "Byzantine conglomerate". Two years after taking office, Mueller was no longer seen as the right person to make sweeping changes, including the possible spin-off of the truck division. As a result, Mueller's future became a matter of dispute and he agreed to vacate the seat, the sources said.

"Müller has shown a certain weariness in his role," said Bankhaus Metzler analyst Juergen Pieper. “Diss went through the school of life at VW” and seems to have earned the respect of the company’s influential people.

Unlike Müller, a four-decade VW veteran, Diess has held senior positions at other companies and is less tied to an established corporate culture. His tough nature was evident in his work at the Volkswagen brand, where he completely overhauled product development and cut costs. The division, which had been stagnating for a long time, increased its profit to 4.1% in 2017 (from 1.8% a year earlier). Diess also became the first Volkswagen manager to attack Tesla in electric vehicles.

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“This car will compete with Tesla and other [manufacturers] that are not our traditional competitors. They need to be taken seriously. This is not Newton's binomial. They have already achieved a lot,” WSJ quotes Volkswagen Chairman of the Board Herbert Diess, who called the ID electric car concept a symbol of the “new age of automotive manufacturing.” The power of the electric motor installed on the rear axle is 125 kW (170 hp); a full recharge of the batteries located under the floor is enough for 400-600 km. The model is planned to be released on the market in 2020, five years later it will feature the fully autonomous control function ID Pilot

/ Gennady Anisimov / Vedomosti