German car giant Volkswagen (VW) is at the top of the group to replace Herbert Diess CEO Oliver Blume, a luxury sports car maker under its umbrella. Announced personnel. VW loses the driving force behind the electric vehicle (EV) business, albeit with a habit of ranting. More importantly, the planned initial public offering (IPO) of Porsche could be disrupted.
Mr. Dees has had some success during his three-year CEO tenure. BMW executive Dís led the shift to VW's battery car and often praised his rival Tesla and its founder Elon Musk. He also mentioned the potential for headcount reductions at VW, which is known to maintain a perilous balance between state and state governments and shareholders in the private sector.
However, Mr. Dies's approach was often angry with the powerful labor-management council and trade unions, which control half of the board of auditors, and questioned their authority. He was controversial with his Nazi-inspired remarks, but this is not the only rant during his tenure. The progress of Calidad, the software division he controlled, was delayed, and his view that he was the only guardian for EV conversion was completely overturned. According to Reuters reports, he not only confronted the union but also lost more than half of VW's voting rights and the support of the Porsche and Piech families who led the replacement of Mr. Dees.
VW's ambitious EV policy, such as raising the proportion of battery-powered vehicles in sales to more than half by 2030, will not be disrupted by Mr. Dies' replacement. Mr. Blume has many achievements in the EV business. He expects Porsche, which he leads, to successfully deploy the EV model "Taycan" and that the profitability of the Green Car will improve to the same level as the internal combustion engine car in two years.
Repartitioning with top shifts may help Blume tackle VW's key challenges. VW needs to improve its sluggish profitability while expanding EV investment. According to Refinitiv's estimates, VW is likely to have an EBIT-based rate of return of only 8% this year. In China, which is the largest market, local rivals may emerge, and it is necessary to protect the market share.
The key issue is that Mr. Blume's appointment as CEO could disrupt the already complex VW and Porsche corporate governance. VW plans to list Porsche and sell more than 25% of its voting shares to the Porsche and Piech families, which should have been primarily motivated to increase Porsche's independence from VW. It becomes ambiguous if Mr. Blume takes the lead at both VW and Porsche.
VW's non-voting preferred stock has fallen by a quarter since February when Porsche's IPO plan was announced. VW's market capitalization is 84 billion euros, which is lower than Porsche's 90 billion euros. If investors become more worried about the turmoil over Porsche's IPO, even Mr. Dies' rant may begin to miss him.
● Background news
* VW announced on the 22nd that CEO Dís will retire on September 1st. His successor is Oliver Blume, CEO of Porsche, a luxury sports car maker under its umbrella.
* Mr. Blume also serves as Chairman of the Board of Directors of VW. In addition, he will continue to serve as CEO of Porsche after the planned IPO.
* Mr. Dies frequently collides with the powerful labor-management council over the effects of electrification. Prolonged talks with unions on investment have reduced the authority of the Chinese business to Ralph Laurenstetter in December last year.
* Mr. Blume joined VW in 1994. He has held management positions in multiple brands such as "VW" and "Audi".
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