Volkswagen strikes CEO power struggle truce as shares boost

Volkswagen has defused a power struggle regarding measures required to accelerate its expansion in electric vehicles, lifting its shares by 5% on Tuesday as investors welcomed CEO Herbert Diess getting allies appointed to major roles.

The conflict had pitted Diess against Bernd Osterloh, Volkswagen’s significant labour boss, whose views varied on pace needed to turn the 83-year old automaker into more of a tech company modelled on Tesla.

Volkswagen’s supervisory board provided unanimous support for the 62-year old CEO in a statement on Monday, and also backing key appointments he had requested, including Arno Antlitz taking over as finance chief from Frank Witter in June.

“The decisive factor is that he (Diess) was able to assert himself on the points that were important in terms of content,” said Ingo Speich, head of sustainability and corporate governance at savings fund company Deka Investment, said.

Diess, who became CEO in 2018, moved away from his demand for an early extension of his contract, which runs until 2023, people familiar with the supervisory board said, in what was observed as a partial victory for Osterloh.

There was also a board agreement that Lamborghini and Ducati will remain part of the Volkswagen Group, which also said it would curb overhead costs by 5% and procurement costs by 7% during the next two years.

Volkswagen said that Thomas Schmall would become board member in charge of a recently created technology division from January 1.

Stefan Bratzel, head of the Center of Automotive Management in Bergisch Gladbach said Diess’ position is “not necessarily strengthened” as he has dealt with setbacks.

“When he has had to give in, frustration remains, and this is transferred to the managers,” Bratzel said.