by Florian Hielscher, Euro on Sunday
The previous VW boss was surprised himself, and the markets were also caught off guard by the news: Herbert Diess will no longer be the boss of Germany’s largest carmaker from September 1st. There is talk of an “amicable” separation. But according to reports, the change was initiated by the Porsche and Piëch owner families. The departure of the boss caused uncertainty among investors, who lost VW shares.
Diess was considered an important driver, had restructured the Wolfsburg-based company’s product portfolio and significantly advanced the orientation towards electromobility. He sometimes went into confrontation and was also unable to solve the problems in the Cariad software division. According to US investment bank Jefferies, Volkswagen has fallen behind in terms of sales and software implementation, and the strategy remains capital-intensive. New impulses are needed now.
Oliver Blume, currently head of VW’s sports car subsidiary Porsche, will take over the management of the group. In the future, he will manage both the parent company and the subsidiary in one person. The start was bumpy, the allegedly close contact with Finance Minister Christian Lindner made for negative headlines. The exchange is said to have been about the continued use of e-fuels, synthetic fuels. Both sides denied an agreement or influence between the FDP and the Porsche boss.
Irrespective of this, the designated VW boss faces major challenges. VW is struggling in the US market, the new edition of Scout, the brand for off-road vehicles, should create new impetus. On the other side of the world, in China, shares have recently been lost. The reasons for this are probably the lack of chips and too few digital functions that customers in the Middle Kingdom appreciate. With up-and-coming competitors such as BYD or Nio, they find local choices. There are also construction sites at PowerCo. The division, which bundles the group’s worldwide battery activities, is struggling with procurement problems: “The supply chain for our business simply does not exist today,” CFO Kai Alexander Mueller admitted recently. Volkswagen is open to listing PowerCo.
Questions about dual roles
In addition, Blume has to take care of his own step onto the trading floor. His current area of responsibility, Porsche AG, is aiming for the IPO in the fourth quarter. Analysts are quite critical of Blume’s dual role as head of Volkswagen and Porsche. Bernstein’s Daniel Roeska says the official reasons for Porsche’s IPO are independence for the sports car maker, funding for VW’s electric strategy and a desire to better highlight Porsche’s value. The decision to appoint Blume as head of VW and Porsche would contradict all three justifications.
Potential: The change at the top brings uncertainties, while valuation and perspectives make VW promising.
Notice of Conflicts of Interest:
The majority owner of the sole shareholder of Finanzen Verlag GmbH, Mr. Bernd Förtsch, the managing editor-in-chief, Mr. Frank Pöpsel, and the deputy editor-in-chief, Mr. Stephan Bauer, have taken direct and indirect positions on the following financial instruments mentioned in the publication or related derivatives who may benefit from any price development resulting from the publication: Volkswagen.
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