The Real Reason Why Herbert Diess Is Leaving VW

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Diess finally lost the support of the Porsche family.

Late last week, it was announced that Herbert Diess would step down as Volkswagen's Chairman of the Board of Management. As of September 2022, he will be replaced by Oliver Blume, who will fulfill this new role while continuing with his other day job as the Chairman of the Board of Management of Porsche AG.

According to Volkswagen's initial press release, Diess' decision to step down was a mutual agreement between him and the company, but now new details have emerged revealing that this might not have been the case.

Bloomberg spoke to an anonymous source within the company who revealed that Diess was not even in the office when VW's supervisory board had the infamous meeting that cut Diess' career short. Diess was in America while this meeting was taking place in Germany.

Herbert Diess/Twitter
"The timing is unfortunate and another illustration of dysfunction at VW."

Diess came to VW from BMW in 2015 to reshape the company after the Dieselgate scandal. Unfortunately, he also got caught up in the scandal after failing to provide valuable information to shareholders. However, this is not why he got booted from his position.

According to the report, Diess lost favor with the Porsche family, who hold most of the Volkswagen Group's stock. Roughly 31%, to be exact. The Porsche family were reportedly big fans of his ideas for an electrified future, which included groundbreaking models like the VW ID. 4 and the upcoming ID. Buzz.

"The departure of CEO Herbert Diess should not be a surprise given how marginalized he had become in recent months," Philippe Houchois, a Jefferies analyst, wrote in a report published by Bloomberg. "The timing is unfortunate and another illustration of dysfunction at VW."

The main reason behind Diess' downfall appears to be the Cariad division, which we predicted in our earlier report. Cariad is VW's in-house department charged with developing next-generation autonomous driving software, and it is shockingly behind schedule.

As we reported earlier this month, the Macan EV has been delayed by a full year due to Cariad's lackluster performance. It has also led to delays across VAG's entire portfolio, including Bentley and Audi. These brands bring in loads of cash for the group, and messing with the schedule is a surefire way to get into shareholders' crosshairs.

Bloomberg's insider also reported that the news was shared with Diess a day later upon returning to Germany. He consulted with his lawyer and ultimately decided to leave. Diess will likely receive the mother of all golden handshakes, however. He will probably be paid for the remainder of his contract, which was only due to end in 2025.

Source Credits: Bloomberg

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