The dispute in Ingolstadt at the premium subsidiary Audi has obviously been smoldering for a long time – but now VW boss Oliver Blume no longer wanted to watch, Audi boss Markus Duesmann has to go.
Blume has promised the owners, investors and employees of the Wolfsburg car giant a clear plan and its speedy implementation. He can hardly be accused of a lack of decisiveness – an overview of the course he has set so far since taking office in September 2022.
personnel decisions
Already on his first day in his new role, the management in the group got the impression that Blume didn’t hesitate. Without further ado, the board of directors was trimmed, the victims were sales manager Hildegard Wortmann and buyer Murat Aksel, who had to go back to the second tier. Aksel was also replaced by Dirk Große-Loheide a few months later.
A few weeks ago, Blume took action at the software subsidiary Cariad. He brought the Bentley production expert Peter Bosch to the top of the problem child, Dirk Hilgenberg had to give way. Duesmann is now the most important post that Blume has filled. The new Audi boss Gernot Döllner is considered his confidant.
Software
Cariad should ensure that Volkswagen can keep up with the software-centric car of the future. Blume’s predecessor, Herbert Diess, never really got the implementation of the ambitious project under control, and ultimately lost his top job as a result.
Blume straightened out the schedules for programming finished versions last fall, and a few weeks ago the project management was also turned inside out with the leadership. In addition, VW is opening up more to partners.
Problems at Cariad had long delayed the launch of important products, including the electric Porsche Macan and the Audi Q6 e-tron. Both models are to be delivered to customers for the first time next year with slimmer software versions than originally planned. Blume definitely wants to avoid further delays.
In addition, in the field of robotic cars, there is cooperation with the software company Mobileye from the Intel group, and in China with the local company Horizon Robotics. A multi-billion dollar investment in the company Argo AI together with the US partner Ford did not prevent Blume from pulling the plug on the start-up beforehand because there was little chance of success without a lot of additional money.
Porsche IPO
The partial IPO of the Stuttgart sports car subsidiary Porsche, also managed by Blume, may seem like a simple financial transaction that flushed billions into the coffers of the VW group in order to be able to raise expenses for research and development. But this also led to a major shift in the power structure of the group: the owner families Porsche and Piëch now have direct access to the sports car manufacturer with the family name again through their blocking minority of just over a quarter of the Porsche AG ordinary shares.
In tears, family patriarch Wolfgang Porsche was forced to hand over control of Porsche AG to the Volkswagen Group after a failed takeover attempt in 2009 – a construct heavily influenced by the state of Lower Saxony and the powerful works council. That the IPO was a success was therefore a major concern for the families. Despite adverse circumstances, Blume went through with it shortly after taking office. Measured by the market valuation, it was the largest IPO in Europe.
China Strategy
In April, VW announced that it would accelerate its decision-making and development processes in China. For this purpose, one billion euros will flow into a new development, innovation and procurement center for fully networked electric cars.
In the huge Chinese market, VW has had problems dealing with the cheap competition in electric cars for a number of years. At the beginning of the year, the VW passenger car brand lost its market leadership, which it had held for decades, to the electric car manufacturer BYD. Especially when it comes to digital networking, Volkswagen is not delivering what Chinese customers want in the interior. Blume wants to be closer to the pulse of customers with the products in China. China is the most important single market for Wolfsburg.
What Blume still has to do with work
Despite the decisions he has already made, Blume still has a lot to do. Above all, the low-yield core brand VW passenger cars, which continues to have problems generating an adequate return even after several savings rounds and regroupings. Therefore, in the coming years, billions in earnings improvements should be brought in.
The core brand plays a central role for the entire group. Blume wants to ensure significantly more joint production with other brands in the plants in order to become more profitable. In addition, savings should be made in sales at the dealers.
CFO Arno Antlitz conceded last week that it would not work without a reduction in labor costs. Initially, the only discussion is that vacancies are often not to be filled. However, the details of savings projects are often tricky. Works council chief Daniela Cavallo Blume is still well-disposed. The details of the austerity program should be available by October.
Blume has also set itself the goal of approaching the capital market more closely in order to increase the group’s stock market value. But the VW preference share is currently worth around 122 euros, around 20 euros less than when he took office. Since the IPO, Porsche AG shareholders have had a good third more in their portfolio. In addition: Investors are still very skeptical as to whether Blume’s dual post is in their best interests due to possible conflicts of interest.
