Volkswagen buyers query plan for CEO Oliver Blume to guide Porsche itemizing

Oliver Blume, CEO of luxurious automotive producer Porsche AG, speaks on the Automobilwoche automotive summit in Ludwigsburg, Germany, on Nov. 10, 2021.ANDREAS GEBERT/Reuters

Volkswagen buyers consider incoming CEO Oliver Blume will battle to guide each the Volkswagen Group and Porsche – and to tug off a deliberate itemizing of the sports activities automotive maker whereas carrying each hats.

Friday’s announcement that group CEO Herbert Diess would get replaced by Porsche boss Blume has rekindled investor considerations about company governance issues at Europe’s high carmaker, which some shareholders have stated weighs on the inventory’s efficiency.

“Blume can’t maintain every part … this underscores the unhealthy company administration at Wolfsburg,” stated Ingo Speich, head of sustainability and company governance at top-20 Volkswagen investor Deka Funding, referring to the German carmaking group’s headquarters.

“It’s poison for the Porsche IPO,” Speich added. Volkswagen plans to listing the luxurious vehicles division within the fourth quarter.

Porsche AG could already must go public at a steep low cost if it decides to go forward with the itemizing as financial obstacles mount, Reuters reported final week.

These considerations have been exacerbated by questions over how Blume can handle his twin position.

“Mr Blume will preserve his position as CEO together with after a potential IPO,” Volkswagen stated on Monday in response to Reuters’ questions.

Simply days earlier than his appointment was introduced, Blume and different Porsche AG executives talking at its capital markets day offered a potential itemizing of the sports activities automotive model as a method to provide it extra independence and entrepreneurial freedom whereas elevating funds for the group.

His twin position calls that independence into query, analysts at Stifel and UBS stated.

“Such a double mandate can solely exist quickly in an emergency scenario – it received’t work within the long-term,” stated Ulrich Hocker of the German Affiliation for the Safety of Securities (DSW), which represents retail buyers.

Nonetheless, most don’t at this stage count on a delay to the itemizing. Some, together with automotive business veteran Ferdinand Dudenhoeffer speculated Porsche finance chief Lutz Meschke could finally take over from Blume on the sports activities automotive model.

In its assertion on Friday, Volkswagen didn’t define any succession planning for Blume at Porsche.

Volkswagen’s share worth has almost halved since March 2021, underperforming a 17% drop within the STOXX Europe 600 Cars & Elements Index over the identical interval.

The carmaker solutions to a posh net of buyers – its supervisory board managed by employees’ representatives and regional authorities, and a holding firm owned by the Porsche and Piech households, staffed partially with Volkswagen executives.

Porsche AG’s Meschke is on the board of Porsche Automobil Holding SE, Volkswagen’s high shareholder and proprietor of greater than half its voting rights, whereas Volkswagen’s chairman Hans Dieter Poetsch is its CEO.

Tensions over who pulls the strings in Wolfsburg have spelled the top of the street for a number of Volkswagen executives earlier than Diess, with former CEO Bernd Pischetsrieder and former VW model chief Wolfgang Bernhard pressured out of their jobs within the late 2000s after repeated clashes with the works council.

Whereas Diess is basically given credit score for Volkswagen’s pivot to electrification – lifting the carmaker from the reputational wreck of the Dieselgate scandal to main Europe’s electrical automotive market – the governance points brought on by his confrontational strategy to management in the end weighed on the funding case, analysts at Stifel Europe Fairness Analysis stated.

“Poor company governance makes many buyers draw back,” Janne Werning, who heads ESG Capital Markets & Stewardship at Union Funding, a top-10 shareholder in Volkswagen, stated on the carmaker’s annual basic assembly (AGM) final yr.

Union Funding, which repeated its criticism of Volkswagen’s governance at the latest AGM in Could, declined to remark for this text.

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