BERLIN— Volkswagen AG’s VOW -0.92% besieged chief executive has survived a monthslong battle with labor leaders but he will now lead Europe’s biggest auto maker on a shorter leash, raising questions about how fast and how far he can push through the electric transformation he started at the company.
VW’s supervisory board Thursday approved a compromise to end the conflict between Herbert Diess and powerful labor leaders at the company who had sought his ouster. As part of the deal, Mr. Diess’s management team has been reshuffled with managers handpicked by the company’s directors, who include labor representatives.
In a management reshuffle, the supervisory board stripped Mr. Diess of responsibility for overseeing the VW brand and the company’s business in China. Mr. Diess remains chairman of the management board, the equivalent of CEO, and will take over responsibility for the company’s software division, Cariad, from Audi CEO Markus Duesmann.
The board promoted Ralf Brandstätter, head of the VW brand, to the management board. Mr. Brandstätter will take over responsibility for China in August next year. He will then be succeeded as head of the VW brand by Thomas Schäfer, current CEO of the Skoda brand.
VW, which also announced fresh investments in plants and electric vehicles, averted Mr. Diess’s removal after weeks of intense diplomacy by VW Chairman Hans Dieter Pötsch, the company’s former finance chief and a close ally of the Porsche-Piëch family that holds 53% of VW voting rights.
VW faces mounting pressure from a global shortage of semiconductors, the continuing impact of the pandemic and rising challenges from competitors such as Tesla.
Photo: aly song/Reuters
The deal leaves Mr. Diess weakened just as VW faces pressure from a global shortage of semiconductors, the continuing impact of the pandemic, rising challenges from Tesla Inc., which begins production of cars in Germany next year, and the rise of Stellantis NV, the Italian-French-American auto group that is challenging VW’s dominance in Europe.
“They’ve reined him in a little and surrounded him with strong leaders on the board,” said Stefan Bratzel, director of the Center of Automotive in Bergisch Gladbach. “It’s a face-saving move. He can remain the CEO but he’s lost some influence.”
VW’s directors approved a five-year investment plan to spend around $180 billion, with more than half going toward investment in digitization and development of electric vehicles. The board put off a decision about whether to build a new factory in Wolfsburg for a planned all-electric self-driving car called Trinity.
The directors also created three new board positions and filled two of them with women, expanding the size of the management board to 11 from seven previously. Manfred Döss, who was a key negotiator for VW with U.S. authorities as the company’s chief counsel in Washington during the Dieselgate emissions scandal, was appointed to the board to oversee legal and compliance matters, succeeding Hiltrud Werner. Mr. Döss is closely allied with the Porsche-Piëch family and serves on the board of the family holding Porsche Automobil Holding SE.
Hauke Stars, a former board member of Deutsche Börse AG , was appointed to the board to oversee information technology, a new position that increases the number of women on VW’s management board to two. Audi sales chief Hildegard Wortmann will also take a board position in addition to her current role and oversee sales for the entire company.
In this new environment, Mr. Diess, a confrontational leader who critics say likes to use provocation to motivate company executives, will have to become more conciliatory in his communication with executives and labor representatives who have enormous influence at the company, analysts said.
Write to William Boston at [email protected]
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