VW CEO Calls Top Management Meeting to Lay Out Overhaul Plan

Volkswagen AG Chief Executive Officer Herbert Diess will address top managers in an internal video conference to map out his plans to overhaul the German industrial giant, according to people familiar with matter.

The meeting Tuesday evening is designed to rally VW’s troops and win backing for his strategy as supervisory board members discuss appointments of senior executives, said the people, who asked not to be identified as the plans are private. A VW spokesman declined to comment.

The management conference and supervisory board decisions will be important for VW’s efforts to defuse tension over Diess’s push for faster and more thorough reform of the world’s largest automaker. The CEO has irked some key stakeholders by seeking a contract extension and fresh vote of confidence.

VW’s powerful labor representatives reaffirmed their backing of Diess over the weekend, but said an early extension of his contract that runs until 2023 isn’t up for discussion. Audi works council head Peter Mosch, a top labor official on VW’s supervisory board, told Augsburger Allgemeine in an interview he believes Diess is ready for compromise.

A previous management conference in June almost cost Diess his job after he accused some supervisory board members of criminal offenses by leaking information to media. He was stripped of direct control of the main VW brand as a result.

VW’s supervisory board last month approved a five-year investment plan that allocates a larger chunk of the total spending worth 150 billion euros ($182 billion) on future technology like electric and self-driving cars. The German manufacturer’s joint ventures in its largest market China aren’t included in the spending plan.

While UBS Group AG analysts led by Patrick Hummel rate VW as a top pick among European automakers, they cautioned that the industry’s outlook is muted as the economic fallout of the Covid-19 pandemic continues.

Balance-sheet and cash-burn concerns have eased after sales recovered, but “higher unemployment, higher auto credit losses, lower residual values are likely to weigh on industry earnings and cash flow well beyond 2020,” Hummel said in a note to clients.

©2020 Bloomberg L.P.

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