Herbert Diess, the Volkswagen CEO whose image was tarnished by the fallout from the German automaker’s emissions fraud scandal, is retiring.
In a surprise announcement Friday, the Wolfsburg, Germany-based company said Diess will depart on September 1 “by mutual agreement” with the board. No reason was given for his departure. Oliver Blume, CEO of the VW Porsche brand, will succeed Diess.
Diess, who took over as chief executive in 2018, led the automaker at a time of significant changes in the industry, including a shift to more electric vehicle production. His contract expired in 2025.
Board chairman Hans Dieter Poetsch thanked Diess in a statement, praising his role in “advancing the transformation of the company.”
“Not only did he steer the company through extremely rough waters, he also implemented a fundamentally new strategy,” Poetsch said.
Diess focused on Volkswagen’s shift to zero-emission vehicles, but analysts say he was unable to bring about change within the company and the automaker has lagged behind on some key developments, such as software implementation.
“With industry challenges accelerating and a growing number of new and fast followers, new management offers an opportunity to review strategy or revive stalled relationships,” analysts at Jefferies Equity Research said in a research note.
Shortly before his departure was announced, Diess posted on LinkedIn about the struggles facing the automaker, from Russia’s war in Ukraine to computer chip shortages that have hampered production.
Despite those difficulties, he said he was “very pleased with our performance,” citing high demand for Volkswagen’s electric vehicles and an uptick in China after COVID-19 lockdowns.
“After a really stressful first half of 2022, many of us are looking forward to a well-deserved summer break,” his post read.
Diess has reportedly clashed with the company’s powerful labor representatives over issues including high-level personnel decisions. Workers have unusual influence at Volkswagen, through requirements that worker representatives sit on the board and because the company’s home state, Lower Saxony, has a stake in the company.
Diess was also followed by the emissions scandal. Coming from BMW, Diess took over as head of the VW brand shortly before he was caught using software to evade US emissions requirements for diesel cars in 2015.
Volkswagen admitted to installing software that activated pollution controls when vehicles were tested and turned them off during daily driving. That made it look like the cars met strict US limits on pollutants known as nitrogen oxides.
The scandal cost the company 31 billion euros ($34 billion) in fines and settlements.
German prosecutors had charged Diess and Poetsch in 2019 with stock manipulation for failing to inform investors in time about the looming scandal. Charges were later dropped in exchange for a payment of 9 million euros (dollars), with neither admitting guilt.
In Friday’s announcement, Volkswagen also said that the company’s chief financial officer, Arno Antlitz, will become the new chief operating officer.