For the native of Lower Saxony, the move to Wolfsburg is a return home and the culmination of his career. But while Blume once took over a flourishing brand with Porsche, he now has to work through a number of construction sites as VW CEO.
Oliver Blume at the IAA in Munich in 2021: The future CEO of the VW Group has good tools for the new task.
The traditional factory holidays in Wolfsburg began on Friday evening with a clap of thunder: Volkswagen parted ways with CEO Herbert Diess. According to reports, the 63-year-old himself was caught cold when he was kicked out. The dismissal of the long-controversial Diess did not come as a surprise, but the timing was. From September 1st, Porsche boss Oliver Blume will be in charge of Europe’s largest automobile manufacturer with its 670,000 employees. Who is the new strong man in the Volkswagen Group and what problems does he urgently need to solve?
From Zuffenhausen to Wolfsburg
Due to his achievements at Porsche, Blume has long been considered the crown prince of the VW empire. The fact that the move from Stuttgart-Zuffenhausen to Wolfsburg is so sudden shouldn’t be a problem for the 54-year-old. He’s used to jumping in at the deep end. In 2015, as the then Porsche Production Director, he was also promoted to Porsche boss overnight, because his predecessor Matthias Müller had to take over responsibility at the Volkswagen Group for Martin Winterkorn, who had resigned. The managerial position at Porsche has often been an excellent stepping stone to assuming overall responsibility for the VW Group, and this now also applies to Blume.
Born in Braunschweig, he is considered a very team-oriented, well-planned and structured manager who cultivates an open culture of discussion and stands for flat hierarchies. His performances are self-confident, but usually not cocky. He made the successful Porsche brand even more successful. Last year, more than 300,000 vehicles were sold for the first time. At the weekend he likes to think about his goals for the following days, Blume once told the NZZ. In addition, he also values medium and long-term goals. While his predecessor Diess was attested to have weaknesses in implementation in recent months, Blume is considered an effective doer.
In the past, the father of two daughters scored with clear early decisions. While the VW concert in 2015 was struggling with the outbreak of the diesel scandal, Blume presented the concept for a fully electric Porsche in Wolfsburg. What was almost a taboo at the time developed into a successful concept. Last year, the sports car manufacturer sold over 40,000 all-electric Taycan models – twice the number originally set as the minimum target.
In addition, Blume decided in 2018 that Porsche would be the first German car company to say goodbye to diesel. However, the company did not build these units itself anyway, they were supplied by Audi.
Software unit Cariad in focus
In his new function in Wolfsburg, Blume should first of all arrange the processes in production and in the most important foreign markets, the “Handelsblatt” wants to know. Apart from this task, the Wolfsburg-based global group has at least five major construction sites when viewed from the outside: the management culture, the software, the China business, the US market and the cooperation of the brands.
While Blume is considered a team player, as mentioned, critics say exactly the opposite about Diess and accuse him of going it alone, provocation and an authoritarian leadership style. The 63-year-old had been at odds with the employee representatives on the supervisory board for two years. This not only damaged his power, but also his basis for action, which was reflected in several demotions. But Diess is also said to have lost a lot of sympathy in the board of directors and in top management in recent years. This weighs heavily, because the management of the group has apparently suffered as a result.
The biggest operational problems were recently with the software, for which VW had one two years ago formed its own unit called Cariad. The speed and quality of the software development leaves a lot to be desired, which is not entirely surprising in view of the completely new unit that has been built from scratch. In contrast to other car manufacturers, Volkswagen has so far primarily wanted to take care of the software itself and not lean on large American tech groups.
That takes a lot of energy and money. In addition, it took the Audi and Porsche brands far too long, which recently led to a dispute with Diess. The group has therefore decided to continue to promote two software architectures in parallel for many years to come, one for the mass brands and one for the premium brands. There are apparently hardly any synergies, but the costs are skyrocketing. Observers speculate that Blume could increasingly rely on external cooperation in the future.
Problems in China and the USA
In addition, business is sluggish in China, where the group sells more than every third car and the VW brand sells almost every second car. When sales falter in the Middle Kingdom, it affects the entire company. The software problems mentioned are even more existential in China, since the technology-loving customers there are much more affinity for software functions than those in Europe. Local competitors like Nio would clearly offer better systems, they say. In addition, China is considered a kind of lead market for electric mobility, so that Volkswagen cannot afford any serious mistakes there. The supervisory board apparently blamed Diess for the existing calamities.
There are also ongoing problems in the US, where the Volkswagen brand has never been particularly strong and where customers are now also concerned about the diesel scandal with the group’s false promises. The Audi brand also traditionally has problems in the United States. However, if the group wants to reduce its dependency on the Chinese market and catch up with world market leader Toyota again, significantly better sales figures in the USA are urgently needed.
In a multi-brand group like VW, the cooperation of the brands is also a permanent construction site. Despite improvements, the VW brand is still lacking in efficiency, Seat has been running poorly for years, Skoda has lost momentum, and there are said to be more and more friction between Audi and Porsche in joint projects. Both of them currently want to get into Formula 1, but whether that makes sense from a group point of view can be argued about.
In addition, Blume will perhaps take another look at the group’s entire strategy, which is very one-sidedly geared towards battery electric vehicles. There may be a risk of new dependencies here, since the raw materials for the production of battery cells are not available in Europe. Other competitors are at least keeping the door open for hydrogen propulsion and longer production of internal combustion engines.
Blume, Lindner and “Porschegate”
Blume, who always looks a bit youthful despite his graying hair, will have to change again in Wolfsburg. The VW headquarters is considered a shark tank. In addition, he will be even more in the public eye in the future. A communication between him and Finance Minister Christian Lindner recently made headlines on social networks and in the tabloid media under the hashtag “Porschegate”.
Blume apparently boasted at a works meeting that he was the main driver behind the inclusion of climate-neutral fuels (e-fuels) in the coalition agreement. Lindner kept him up to date almost every hour, Blume is said to have said. In the meantime, Blume has corrected the rather rare bout of cockiness. He had “chosen the wrong words” and this created a “wrong impression”. In the future, Blume will have to weigh his words even better – and at the same time quietly solve the problems in Wolfsburg.
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