VW board tensions escalate as CEO forces vote of confidence

Volkswagen risks dealing with a leadership crisis after the group’s chief executive officer asked for an early contract extension, Reuters is reporting.

Citing three sources close to the brand, Reuters claims CEO Herbert Diess has demanded a contract extension despite his current term not coming to an end until 2023.

The move effectively forces a vote of confidence in Diess’s leadership of the car-making group, which is the world’s largest in terms of sales. The brand’s supervisory board executive committee, which includes VW’s chairman Hans Dieter Poetsch, members of the owning Porsche and Piech families and German labour boss Bernd Osterloh, will reportedly meet today to discuss the extension.

It is reported that an influential factor in Diess’s contract extension request is frustration owing to labour (trade union) leaders blocking reform proposals and cost reductions. Under German company law, labour representatives can be appointed by workers to almost half of the director seats on the supervisory board. That is the situation within VW’s board, while local politicians also have a 20% voting stake, allowing them to vote down significant reform proposals.

Last week, Diess commented on his frustration in a column published in German newspaper Handelsblatt.

“When I took office in Wolfsburg, I had firmly resolved to change the VW system. This meant breaking up old, encrusted structures and making the company more agile and modern,” he said.

“Together with many companions with the same level of motivation, I succeeded in doing this in many places, but not in some, especially not yet at our corporate headquarters in Wolfsburg.”