VW CEO Diess wins board support for reforms

MUNICH -- Volkswagen Group CEO Herbert Diess won backing from the automaker's supervisory board to continue his reforms at the automaker but he failed to get an extension of his contract.

A statement from the supervisory board on Monday said members "unanimously resolved" to give its full support to Diess's strategy, "in particular the orientation of the company towards electromobility and digitalization."

"Over the coming years, the executive board will implement this strategy under Herbert Diess' leadership," the board said.

Diess got the board's support for his candidate for the job of chief finance officer and for his wish to separate the automaker's procurement and components divisions.

The board also said that VW would cut overhead costs by 5 percent and procurement costs by 7 percent over the next two years.

Key points from the board's statement were:

• Lamborghini and Ducati will remain part of VW Group. The divestment of the Italian luxury brands had been under discussion to streamline the group's brand portfolio. The statement gave no commitment to Bugatti. Reports have said VW is in talks to sell Bugatti to Croatian performance electric-car specialist Rimac.
• Bentley will be placed under Audi's control. Currently Porsche CEO Oliver Blume has overall resonsibility for Bentley. Automobilwoche, a sister publication of Automotive News Europe, first reported the plan in October. Bentley's future lineup up will share more technology with Audi, including using the Artemis technology project that is developing a successor for Audi's A8 flagship sedan to also develop a full-electric car for Bentley.

• VW's home plant in Wolfsburg, Germany, will become "the pioneering factory" for the highly automated manufacture of electric vehicles. VW brand's EV flagship will be built there. The decision meets a demand by the automaker's German labor bosses.
• Arno Antlitz, currently Audi finance boss, will succeed Frank Witter as VW Group CFO. Antlitz's promotion to the VW Group post was originally opposed by labor bosses because he upset unions in his previous job as finance chief for the main VW car brand, sources have said.
• The group's procurement and components functions will be separated.
• Thomas Schmall will have a new management board function responsible for technology. Schmall is currently CEO of Volkswagen Group Components. He has won praise for leading a switch to electrification at the automaker's components plants in Germany.
• Murat Aksel will take over the purchasing division. He will continue as VW brand purchasing boss. "The separation of purchasing and components is meant to allow Aksel to concentrate fully on optimizing the material costs throughout the group," VW said in its statement.

Diess had sought to lower costs in Germany to free up resources for a mass electrification push and to transform the 83-year old automaker into a tech company modelled on Tesla.

That led to a clash with Bernd Osterloh, VW chief labor representative, over issues including appointments to the management board and whether to extend Diess's contract beyond 2023.

Diess had asked the board to extend his contract to help win backing for his reforms. Unions and some board members said it was too early to discuss the issue.

Reuters and Bloomberg contributed to this report