Volkswagen Ceo, Facing Series Of Setbacks, Will Step Down

FILE - In this Monday, Sept. 9, 2019, file photo, CEO of Volkswagen Herbert Diess introduces the new VW ID.3 at the IAA Auto Show in Frankfurt, Germany. Volkswagen has announced that the CEO of the German automaker is stepping down. The company said Friday that Herbert Diess will depart as of Sept. 1 “by mutual consent” with the board. His contract was set to expire in 2025. (AP Photo/Michael Probst, file)
FILE - In this Monday, Sept. 9, 2019, file photo, CEO of Volkswagen Herbert Diess introduces the new VW ID.3 at the IAA Auto Show in Frankfurt, Germany. Volkswagen has announced that the CEO of the German automaker is stepping down. The company said Friday that Herbert Diess will depart as of Sept. 1 “by mutual consent” with the board. His contract was set to expire in 2025. (AP Photo/Michael Probst, file)

VIENNA (AP) — Herbert Diess, the Volkswagen CEO whose image had been tarnished in the fallout from the German automaker’s emissions-cheating scandal, is stepping down.

In a surprise announcement Friday, the Wolfsburg, Germany-based company said Diess will depart Sept. 1 “by mutual consent” with the board. No reason was given for his departure. Oliver Blume, CEO of VW brand Porsche, will succeed Diess.

Diess, who took over as chief executive in 2018, presided over the automaker at a time of significant change in the industry, including a shift toward increased production of electric vehicles. His contract was set to expire in 2025.

Board Chairman Hans Dieter Poetsch thanked Diess in a statement and praised his role in “advancing the transformation of the company.”

“Not only did he steer the company through extremely turbulent waters, but he also implemented a fundamentally new strategy,” Poetsch said.

Diess focused on Volkswagen's shift toward zero-emissions vehicles, but analysts say he wasn't able to create change within the company and that the carmaker has fallen behind in some key developments, such as software implementation.

“With industry challenges accelerating and a growing number of new and fast-follower challengers, new management offers an opportunity to revisit strategy or jump-start stalled relationships," analysts at Jefferies Equity Research said in a research note.

Shortly before his ouster was announced, Diess posted on LinkedIn about the difficulties facing the automaker — from Russia’s war in Ukraine to a shortage of computer chips that has stymied production. Despite those struggles, he said he was “very satisfied with our performance,” citing high demand for Volkswagen’s electric vehicles and a rebound 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 said.

Diess reportedly has clashed with the company’s powerful labor representatives over issues including top personnel decisions. Workers hold an unusual amount of clout at Volkswagen, through requirements that worker representatives hold board seats and because the company’s home state of Lower Saxony holds a stake in the company.

Diess also was trailed by the emissions scandal. Coming from BMW, Diess took over as head of the VW brand shortly before it was caught using software to evade U.S. emissions requirements for diesel cars in 2015.

Volkswagen admitted installing software that turned on pollution controls when vehicles were being tested and switched them off during everyday driving. That made it look as if the cars met tough U.S. 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 over a failure to tell investors in time about the looming scandal. The charges were later dropped in return for a 9 million-euro (dollar) payment, with no admission of guilt from the two.

In the announcement Friday, Volkswagen also said the company's chief financial officer, Arno Antlitz, will become the new chief operating officer.