FRANKFURT — Herbert Diess may want to watch his back.
The Volkswagen CEO, who earned almost €10 million ($11.3 million) last year, no doubt remembers how he came to run the carmaker: The ambitious Austrian went behind his aging predecessor’s back to convince directors he was the best man to lead VW into the future.
Following a series of blunders by Diess, 61, largely centered around its flagship Golf model, the board may now be getting other ideas.
After finding themselves on the receiving end of a Diess attack, the 20 nonexecutive directors — split equally between shareholders and unions — delivered what can only be seen as a public censure of their CEO: Under pressure, he was forced to cede control over the VW brand to Ralf Brandstätter, 51, the operations chief installed at the behest of labor leaders.
“The unions have weakened Diess — he’s wounded,” a source close to the board said. “As long as Lower Saxony doesn’t side with them [to create a majority], they cannot get rid of him, though.”
Despite suffering his biggest defeat since taking over in April 2018, insiders at the company say the hot-tempered and demanding Diess is not the type to back out of a fight or give in to adversity. He also continues to retain overall control over the volume brands that include Skoda and Seat as well as VW, and also groupwide responsibility for sales and for China.
A series of missteps around the all-important Golf hatchback — built in Wolfsburg, near the company headquarters — was the catalyst behind the warning he received.
Trade unionists had been furious with what they called “enormous pressure” to meet the car’s launch date in December, when most Germans were planning for Christmas holidays. Not only did Diess dismiss their concerns, he inflamed them by describing it as “one of the best ramp-ups we ever had” in a LinkedIn post.
“In the time frame envisioned, it demanded everyone work at the limits of their capacity,” said a company source. “We brought it a month too early.”
But delaying it would have been costly, too. Since the hatchback lacked a standard center airbag — required for a five-star safety rating as of January — VW would have fallen short with its signature car, which one official said would have been humiliating.
Making matters worse, the subsequent European rollout, already difficult because of the coronavirus outbreak, was marred by a problem with a mandatory eCall safety system. All 30,000-plus Golf 8 models delivered in Europe had to be recalled, and VW stopped delivery of others for three weeks.
Tempers rose further after a controversial 10-second Golf ad was posted on Instagram that critics argued hid a racist message. An internal investigation found no racist intent, but VW apologized for the video, calling it “inappropriate and tasteless.”
