According to a valid contract, Herbert Diess is to be the head of the VW Group by the end of 2023. However, he has already asked the supervisory board to extend the contract.
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Major changes are taking place inside the Volkswagen Group under the leadership of Chairman of the Board Herbert Diess. The most visible to the public is the great emphasis placed on electromobility, of which Diess is a great supporter. But the head of Volkswagen is also fighting for a major restructuring of the company and its downsizing. And for this step, he needs the trust of the supervisory board.
For this reason, according to behind-the-scenes reports, Diess asked the Supervisory Board to extend the existing contract. Diess joined the VW Group in the summer of 2015, as head of development at BMW. At first he headed the Volkswagen brand, but in 2018 he became chairman of the board of directors of the entire group, replacing the indistinct Matthias Müller. According to the group’s tradition, he received a five-year contract, which is to expire at the end of 2023.
There is still plenty of time for its possible extension, yet Diess has already asked the Supervisory Board. It is supposed to be an effort to gain the trust of the Supervisory Board in the steps it is currently taking and wants to take in the coming years.
And that is the problem. Diess wants to restructure the company and downsize it. Even according to analysts, Volkswagen is struggling with high production costs. This is due to the fact that, according to internal data, the VW Group had over 671,000 employees at the end of 2019. In contrast, Toyota, which produces a similar number of cars as the VW Group, had only about half of them at the same time, almost 360,000 workers.
However, the unions do not logically like such a step. And their boss, Bernd Osterloh, is opposed to the carmaker firing. The advantage is the strong representation of trade unions in the management of the group. This is one of the reasons why Osterloh can have an important say in any decision about the future of Diesse in the management of the carmaker. Behind the scenes reports indicate that Osterloh is against the premature extension of the group’s head of contract.
The recent statement by the group’s chief suggests that the dispute between Diess and the unions is indeed underway. “When I took office in Wolfsburg, I decided to change the VW system. That meant breaking up old covered structures and making society more agile and modern, “he said in the economic daily Handelsblatt, sighing that not all of these structures had been broken.
The advantage of the current head of the concern, however, is that behind him stands the Porsche family, which still partially owns the carmaker. “Families continue to support Diesse,” said a spokesman for Porsche Automobil Holding SE, the company that holds a majority stake in the VW Group.
The following days and weeks can show who has the biggest say in the group and what confidence Diess really has. In any case, analysts warn that this dispute will not lead to an even deeper crisis in the management of the world’s largest carmaker.
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