VW's New Chief Pledges Faster Revamp to Speed Up Decisions
(Bloomberg) -- Volkswagen AG’s new top manager pledged to speed up the German carmaking giant’s decision-making as it confronts a seismic industry change in technology while moving beyond its diesel-emissions scandal.
Volkswagen will streamline into a more compact structure, and it’s keeping “all options open” as it reviews which businesses to keep, Chief Executive Officer Herbert Diess told reporters Friday at company headquarters in Wolfsburg. The manufacturer will create a chief operating officer post to alleviate the CEO’s workload, Chairman Hans-Dieter Poetsch said.
The supervisory board approved sweeping corporate changes, including the promotion of VW-brand head Diess to the group’s top post, at a four-hour meeting Thursday evening. The most significant structural decision paves the way for a standalone stock listing of the trucks division, with assets that Evercore ISI estimates at as much as 30 billion euros ($37 billion). Friday’s meeting marks the end of a tumultuous week sparked by a cryptic statement Tuesday about now former CEO Matthias Mueller’s future that made no mention of a broader revamp.
The reorganization focuses power in Diess’s hands, as he will gain oversight of group research and development plus vehicle-related information technology plus continue running the VW brand. Chief Financial Officer Frank Witter will also take control of corporate IT, while Rupert Stadler, the head of the Audi luxury division, will additionally manage group sales and Porsche unit chief Oliver Blume will oversee production.
As divisional executives take over group tasks, “the direction of our group’s development is obvious,” Diess said Friday. At the same time, the corporate revamp marks “an evolution rather than a revolution.”
Mueller’s abrupt exit after less than three years, even after a stellar improvement in Volkswagen’s earnings, stems from key stakeholders’ decision to bring in fresh leadership as the company emerges from its diesel emissions-rigging crisis. Diess will focus on making the 640,000-employee behemoth more nimble to contend with a shift to electric and autonomous cars and new digital services like ride hailing.
Diess conceded that the diesel scandal, which erupted in September 2015, will continue having effects for a few more years. Provisions for recalling or buying back cars and paying fines and other penalties have amounted to 25 billion euros, and the carmaker is still contending with lawsuits.
“We’ve lost a great deal of trust with customers,” Diess said. “It’ll be a long, rough road to gain it back.”
Volkswagen shares rose 0.5 percent to 177.42 euros as of 12:36 p.m. in Frankfurt, bringing the stock’s gain this year to 6.6 percent.
The truck and bus unit’s conversion to a joint-stock company is part of a project to arrange group’s 12 vehicle nameplates into four groups to forge closer ties between similar operations, such as mass-market units Skoda and Seat. Poetsch said that, whatever moves the company makes with the truck division, Volkswagen won’t cede control.
©2018 Bloomberg L.P.