- Three years into his dual assignment, Blume is facing increasing pressure to focus on one of his two posts given a perceived conflict of interest and mounting problems in China. “It’s been clear since the beginning that the dual role is not intended to last forever,” responds Blume, adding the decision in the end rests with the respective boards.
Much like Tesla, Volkswagen is managed by a CEO that splits up his week running different companies. And just like Elon Musk, VW’s head honcho is similarly under pressure by shareholders to devote more of his attention to his main car business.
While the Tesla CEO already pledged to spend more time at Tesla, Volkswagen’s Oliver Blume still has no clear plan for his succession at luxury sports car maker Porsche three years into his term.
Elevated to the position after the board sacked his Austrian predecessor, Herbert Diess, in the summer of 2022, the native German has opted to keep both roles as agreed with both companies’ boards.
“Volkswagen has in Mr. Blume only a part-time CEO, who finds himself neck deep in problems,” Janne Werning, head of ESG Capital Markets & Stewardship at Union Investment, said at the company’s virtual annual meeting on Friday.
In a company statement sent to Coins2Day, Blume indicated the decision lay with each respective non-executive board of directors as to how long the current structure is considered advantageous.
“I really enjoy both roles and aim to fulfil each to 100 percent,” he said in the statement, “but it has been clear since the beginning that the dual role is not intended to last forever.”
Blume pointed additionally to the recent reshuffling in four key c-suite positions at Porsche as another reason why his leadership at the sports car maker is still needed. The manufacturer of the 911 Carrera this year is swapping out its chief financial officer and head of sales and marketing and appointed a new chief of procurement and personnel boss.
‘You need both hands on the steering wheel’
Blume’s dual role became increasingly controversial after Volkswagen raised capital from investors as part of a record IPO of Porsche. With VW primarily seen as a carmaker and Porsche positioned as a pure luxury brand, the two appealed to distinct groups of shareholders. This creates a conflict of interest as different fiduciary constituencies vie for Blume’s limited time.
“You need both hands on the steering wheel, and currently that’s not the case,” said Ingo Speich, head of corporate governance at Deka Invest, at Volkswagen’s AGM on Friday.
Hendrik Schmidt, a corporate governance expert with fund manager DWS, pointed out Blume is the only CEO to run two companies listed on the blue chip DAX index at the same time—“a situation unique in the German corporate landscape.”
The conflict over the two roles isn’t helped by the difficult situation that Volkswagen and Porsche are currently facing, particularly in China.
It has gone from being a market where profitable growth seemed limitless to one where the domestic competition is quickly replacing non-Chinese brands, especially among younger consumers.
Blume’s answer to current malaise—accelerate to ‘China speed’
While Blume’s Porsche enjoyed all-time high records in vehicle sales across four out of its five main global regions last year, the story was a very different one in China.
“The environment has changed in the shortest of time periods, the market has completely collapsed. Our volumes are now only a third of what we had just two years ago,” he told Automobilwoche in an interview published on Monday.
Even Volkswagen Group’s Chinese joint ventures—which manufacture locally using domestic suppliers—have failed to transfer their dominance in combustion engines to EVs and plug-in hybrid carmakers. Despite their 22% share of the former, they do not even make the top 10 in the latter.
The brutal price competition across the industry now means the JVs have seen their proportionate operating income steadily shrink to just €1.74 billion last year versus €4.4 billion five years earlier, according to company accounts.
Blume’s answer has been a new groupwide strategy to match competitors, accelerating VW’s efforts to what he himself on Friday called “China speed”.
