FRANKFURT — Volkswagen risked a management disaster Tuesday after Chief Government Herbert Diess pressured a vote of confidence in his reform efforts by asking for an early contract extension.
The multi-brand automotive and truck maker is convening its Government Committee to debate Diess’s demand for the contract extension, lengthy earlier than his present time period involves an finish in 2023, three sources advised Reuters on Monday.
Volkswagen Chairman Hans Dieter Poetsch is in search of to avert a conflict between labor leaders and Diess by suspending discussions a few contract extension, an individual acquainted with the matter stated.
Diess, who defected from BMW in 2015, and helped Volkswagen to reform after its diesel scandal with an $87 billion electrical automobile funding plan, has grown pissed off with German labor leaders blocking price cuts.
The supervisory board’s Government Committee, which is headed by Poetsch, and contains Wolfgang Porsche and Hans Michel Piech, members of the carmaker’s proudly owning households, in addition to labor boss Bernd Osterloh, is because of meet on Tuesday, the three sources advised Reuters.
Volkswagen declined to remark.
“The households proceed to help Diess,” a spokesman for Porsche Automobil Holding SE, the corporate which holds a majority voting stake in Volkswagen stated on Tuesday.
The assembly comes on the day that Tesla’s CEO Elon Musk is because of obtain the Axel Springer award in Berlin for his achievements in engineering, after the electrical carmaker determined to construct a manufacturing facility on the outskirts of the German capital.
Analysts stated the Volkswagen committee assembly highlighted the difficulties in reforming a carmaker the place labor representatives management half the seats on the board of administrators and native politicians have a 20% voting stake, permitting them to vote down important strategic reform proposals.
“The corporate has a number of the most superb and most international manufacturers, it has the size to deploy any expertise and the innovation energy to be an early mover. What it seems to be missing is the suitable company governance,” Bernstein autos analyst Arndt Ellinghorst stated in a notice late on Monday.
“There ought to be no phantasm, this transformation will at all times set off conflicts. Whether or not there’s a new CEO or not, the questions will stay the identical, and any VW CEO will want the complete backing from VW’s largest shareholders, the Porsche households.”
Volkswagen is value $92.4 billion, far under rival Toyota’s market worth of $155.7 billion and Tesla’s $555 billion.
And that is although Volkswagen offered 10.96 million autos final yr — probably the most by any carmaker on the earth — whereas Toyota got here in second with 10.74 million. Tesla offered solely 367,500 vehicles in the identical interval.
Analysts say Volkswagen is much less environment friendly and has increased prices. Volkswagen Group had 671,205 staff on the finish of 2019, in contrast with 359,542 at Toyota on the finish of its fiscal yr, and 48,016 at Tesla final yr.
Forcing the difficulty
German corporations typically deliberate contract extensions for administration board members solely a yr forward of expiration. Diess, nevertheless, pressured the difficulty after labor chief Bernd Osterloh stifled his reform efforts.
These included Diess’s makes an attempt to put in allies Arno Antlitz as chief monetary officer and Thomas Schmall as chief procurement officer on the administration board, the three sources advised Reuters.
Slightly than approving every particular person appointment, the labor leaders insist on approving a “bundle answer” which is “harmonious,” two folks acquainted with the deliberations stated.
Osterloh can also be stated to oppose an early contract extension for Diess, one of many three sources stated.
In a publish on LinkedIn this week, Osterloh stated there was no combat about administration appointments as a result of no committee on the supervisory board had been formally consulted concerning the problem.
Diess, for his half, voiced his frustration in a column within the German every day Handelsblatt printed on Friday.
“After I took workplace in Wolfsburg, I had firmly resolved to alter the VW system. This meant breaking apart outdated, encrusted buildings and making the corporate extra agile and fashionable,” he stated.
“Along with many companions with the identical stage of motivation, I succeeded in doing this in lots of locations, however not in some, particularly not but at our company headquarters in Wolfsburg.”
