On the face of it, Volkswagen Group CEO and chairman Matthias Mueller ought to be in a strong position. When he took the CEO role in 2015, the company was facing a very severe crisis. ‘Dieselgate’ had broken and then CEO Winterkorn had to go. Worse than the immediate crisis itself was the sense of a vast company and decision-making culture worryingly disconnected from sound business practice and ethics. A major reorganisation of the reporting structure was undertaken. The right things were said. There was an explicit recognition of the need for change, as there had to be.
Fast forward to 2018 and the dieselgate crisis is far from over, but it appears to have been largely navigated – so far – without any lurches to new disasters. Pictures of to-be-scrapped cars as far as the eye can see in the US don’t look good and Europe is far from fully resolved, but the crisis hasn’t – at least in bottom line terms – been as bad as some feared it might be. VW Group enjoyed record sales and profits in 2017.
Matthias Mueller clearly played an important part in steadying the ship – a ‘safe pair of hands’. A caretaker manager, perhaps. The right man at the right time. He was/is a VW Group insider (a ‘lifer’), but was highly regarded for his work at Porsche. An engineer and technocrat, he led a strategy to rebuild shattered confidence at VW and set the group on a strategic path to face the big challenges ahead. Is electrification ‘greenwash’? It’s an easy accusation to make, but Volkswagen Group is putting in place a new product development and manufacturing strategy to address e-mobility. It doesn’t appear to be off the pace, far from it.
Electrification, though, is an expensive business. It will put a higher stake on scarce investment resource and puts added focus on cost management elsewhere. There is a feeling among some analysts and investors that this is where Mueller increasingly looked less likely to be effective than another executive – the head of the VW brand, Herbert Diess. He is said to have a reputation for being very on top of cost control. He also came to Volkswagen from BMW in 2015, so is not subject to the ‘insider’ suspicions that sometimes get whispered concerning Mueller (who was a senior manager in product development at the time illegal software was being developed).
Volkswagen Group operating profit, before special items
Volkswagen Group’s industrial might is undeniable. It is one of the auto industry’s largest companies and a bulwark of the German economy. However, automotive companies are facing some of the biggest challenges ever. Has he reshaped the company’s culture? Is Wolfsburg still largely impermeable to attempts at serious reform and cost-cutting? There are enough doubts to create a feeling that someone else might be better equipped to take the company to the next level, someone who is highly capable, but not so heavily immersed in VW’s culture (while still constituting an appointment from within).
A meeting of the VW Group supervisory board on Friday (April 13th) should see Matthias Mueller’s fate sealed. It’s hard to imagine that he can carry on as CEO after the cryptic way that VW signalled this week that change at the top is coming. He can, though, leave the top job with his head held high. He may just be a little bit relieved to do so. The difficult job of managing the often dysfunctional corporate beast that is VW AG, with its entrenched and often opposing interests and stakeholders, becomes someone else’s headache. For Herbert Diess, there’s the difficult task of not only dealing with VW’s always challenging global business goals and ever present thorny politics, but being seen to make a difference that Matthias Mueller couldn’t quite make.
See also: VW to toss out CEO?