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VW boss Diess shoots against the VDA

The largest automobile association VDA would like to increase the contributions but VW boss Herbert Diess does not play along. But is it really all about the money?

The Association of the German Automotive Industry (VDA) is also feeling the consequences of the corona crisis – and wants to ask its members to pay. The association obviously made the calculation without the opinionated VW boss Herbert Diess.

He thwarted the association’s plans with clear words. The “Business Insider” reports and refers to a leaked email.

The largest source of income for the VDA collapsed due to Corona

So far, the VDA members finance, including the large car manufacturers such as Volkswagen Volkswagen Vz share, Daimler Daimler share or BMW BMW Vz share are about a quarter of the association’s budget.

The main source of income for the VDA, on the other hand, is the organization of the IAA trade fair – the International Motor Show. But in the pandemic, the trade fair industry had largely come to a standstill. The IAA was canceled in 2020, the next is not planned until 2022.

Until then, the important lobby association of the automotive industry still needs financial resources and, according to “Business Insider”, was thinking of a higher burden on its members – after all, the association had not increased the contributions for 15 years.

VW CEO Herbert Diess then expressed himself sharply in an email according to “Business Insider” to VDA President Hildegard Müller. “Our industry is in a historically extraordinary and very challenging situation,” said Diess, referring to the semiconductor shortage and the challenges posed by the transformation to e-mobility and digitization.

Are there differences in content behind the discussion?

The association should first rethink its own costs and look for potential savings in its spending before discussing increasing revenues, Diess continues, according to “Business Insider”.

The costs would be quite affordable for the largest German car manufacturer. The contributions would have increased from around 650,000 euros to just under 2 million euros, but even in the pandemic year 2020, Volkswagen made a profit of 8.8 billion euros.

Is it possible that Volkswagen is more concerned with the political orientation of the large automobile association? It was only in May that the latter stood behind both e-mobility and hydrogen as a sustainable means of propulsion.

This does not believe in hydrogen propulsion

“The VDA is the opinion of its members and the German automotive industry has not taken electric mobility seriously for a long time,” says Tobias Seige, partner and e-mobility expert at the investment banking consultancy Cowen, t-online.

VW, on the other hand, focuses very much on e-mobility – Herbert Diess in particular often links the image of VW in social networks with the change to the electric car. The VW boss, on the other hand, thinks little of hydrogen as an alternative drive.

Tense relationship between VDA and VW

The relationship between VW and the VDA has not always been easy in the past, says Seige. “Diess was the first to consistently gear the VW Group towards e-mobility and software. That led to tension in the VDA years ago,” says the expert: because many in the VDA would have continued to dream of extending the life of the combustion engine.

The current differences of opinion between the VDA and VW are certainly also a discussion of principles. “In times in which manufacturers have to cope with a gigantic transformation process, premium increases by three times do not fit into the world and meet with resistance,” explains Seige.

VW boss is forgiving

Diess itself contradicts against the automobile week the allegations of wanting to put the VDA under pressure with the discussions about contribution payments. “The VDA is an important voice for the German auto industry in politics and the general public,” says Diess, praising the work of VDA President Müller.

The board of directors, which includes the bosses of the other major automakers and suppliers as well as VW boss Diess, nevertheless failed the proposed increases in contributions. According to the association, a new solution is currently being sought.

VW boss has already proven his assertiveness several times

The discussion should therefore continue: With Volkswagen’s transformation to e-mobility, Diess already demonstrated how consistently and uncompromisingly he can push through his course.

It was only last year that a power struggle flared up in Wolfsburg over the filling of several executive board positions, especially with regard to the successor to the Group’s CFO Frank Witter.

In the end, Diess also prevailed here. Against the resistance of the then works council chairman Bernd Osterloh, Diess managed to get the supervisory board to name his favorite Arno Antlitz, previously Audi chief financial officer.

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