Volkswagen CEO Diess resigns in a surprising move

Volkswagen CEO Diess resigns in a surprising move

The company announced on Friday that CEO Herbert Diess will be replaced by Oliver Blume, head of Volkswagen (VLKAF)its Porsche performance car division.

Volkswagen, the world’s second largest car manufacturer, gave no reason for Diess’ exit.

But a Reuters report citing unnamed sources said the Porsche and Piech families – who between them own a majority of the voting rights in Volkswagen – were pushing for a change at the helm. The company did not immediately respond to a request for comment on the report.
Nevertheless, he managed to put that scandal mostly in the company’s rearview mirror. And he focused on electric vehicles more than many established automakers, positioning Volkswagen for a major shift.

Electric focus

VW has said it will spend 89 billion euros over the next five years on developing electric cars, about half of its planned consumption at that time, and it aims for electric cars to represent a quarter of sales by the end of 2026.

The number of battery-powered electric cars that VW sold almost doubled in 2021 to nearly 453,000 globally, ranking 3rd behind only Tesla and General Motors in pure electric cars sold – with most of the latter’s sales coming from a Chinese joint venture. VW surpassed all other automakers, including Tesla, in European EV sales by 310,000 vehicles.

Tesla still sold more than twice as many pure electric cars as VW did in 2021 — and electric cars represented just 5% of the vehicles VW sold last year — but the shift in focus under Diess was important for the company’s future plans.

“Herbert Diess played a key role in promoting the transformation of the company. The group and its brands are viable for the future; its innovative capabilities and earning power are strengthened,” Hans Dieter Pötsch, chairman of the company, said in a statement. “Not only did he steer the company through extremely turbulent waters, but he also implemented a fundamentally new strategy.”

But not everything was rosy. While Volkswagen may be further along than most traditional carmakers in its planned transition to electric vehicles, it has fallen further behind Toyota in the race for total vehicle sales – a key factor in this sector.

Volkswagen has already sold out of electric cars in key markets this year

Last year, Toyota reported a total of 10.5 million car sales in 2021, surpassing Volkswagen by more than 1.5 million. Pre-pandemic in 2019 Volkswagen had beaten Toyota by 200,000 cars with 10.9 million vehicles sold.

In addition, Volkswagen shares have also underperformed Diess, gaining only around 10% since he was appointed CEO in 2018 – well below Toyota (TM)its 60% gain at that time. So far this year, Volkswagen (VLKAF)‘s Germany-listed shares are down 28%.

As part of managing the management, CFO Arno Antlitz will become chief operating officer.

— CNN Business’ Peter Valdes-Dapena contributed to this report.

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