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VW CEO lost his job over buggy software that delayed new models

It says a lot about the state of the auto industry and where it's going that software problems have cost the CEO of a carmaker his job. Volkswagen ousted Herbert Diess as chief executive officer after severe software-development delays set back the scheduled launch of new Porsches, Audis and Bentleys. This was untenable considering buggy software postponed the debut of VW’s initial rollout of ID models, and customers are still having to drop off their cars at the dealer for updates the company has struggled to make over the air. Sure, Diess also didnÂ’t do enough to make allies and became increasingly isolated due to his hard-nosed leadership style. In his push to transform the company into an electric-vehicle leader, he repeatedly clashed with labor leaders by warning VW was losing out to Tesla and needed to cut thousands of jobs. But failures at the carmakerÂ’s software unit Cariad ultimately eroded DiessÂ’s support from the powerful Porsche and Piech family that calls the shots. Back in December, VW overhauled its management board, stripping Diess of some responsibilities while tasking him to turn around Cariad. While thereÂ’s been a lot of re-arranging since then, Diess didnÂ’t manage to make the issues go away. Discord at Cariad has pushed back the rollout of important new models including the electric Porsche Macan, a high-volume sport utility vehicle for the division thatÂ’s planning an initial public offering in the fourth quarter. AudiÂ’s new line of Artemis EVs has been delayed by around two years to 2027. And VWÂ’s ultra-luxury brand Bentley may not be able to go all-electric by the end of this decade as planned because of the software issues, Automobilwoche reported earlier this month. “Taking over the ship at Cariad seems to have been DiessÂ’s downfall,” said Matthias Schmidt, an independent auto analyst based in Berlin. VWÂ’s solutions to challenges tend to reflect its status as an industrial behemoth: itÂ’s able to throw lots of money and people at its problems. But modernizing the company for the digital age is going to take bringing in talent and building skillsets outside its traditional zones of expertise. Drivers increasingly demand intuitive user interfaces and services that could create new revenue streams, if done correctly. “Software is the key to the future,” TeslaÂ’s Elon Musk tweeted when one of his followers asked about VW switching CEOs. Diess certainly didnÂ’t lack ambition.

Automakers face reality of EVs' cost — to jobs, and their bottom line

Related: We obsessively covered the Frankfurt Motor Show — here's our complete coverage FRANKFURT, Germany — European car bosses gathering for the Frankfurt auto show are beginning to address the realities of mass vehicle electrification, and its consequences for jobs and profit, their minds focused by government pledges to outlaw the combustion engine. As the latest such announcement by China added momentum to a push for zero-emissions motoring, Daimler, Volkswagen and PSA Group gave details about their electric programs that could give policymakers some pause. Planned electric Mercedes models will initially be just half as profitable as conventional alternatives, Daimler warned — forcing the group to find savings by outsourcing more component manufacturing, which may in turn threaten German jobs. "In-house production is almost irrelevant to the consumer," Daimler boss Dieter Zetsche told reporters on the eve of the Frankfurt Motor Show, in the midst of a German election campaign in which automotive jobs have loomed large. The company set a target of saving 4 billion euros ($4.8 billion) by 2025 to help fund the cost of its electric cars. "Daimler is the first company to state explicitly how much electric vehicles are going to hurt margins," said Bernstein analyst Max Warburton. "It was brave to go first — but of course it won't be the last." Volkswagen, for its part, said it was seeking new global supplier contracts to source 50 billion euros ($60 billion) of electric car content including batteries, which are not yet manufactured competitively in Europe. "A company like Volkswagen must lead, not follow," Chief Executive Matthias Mueller told reporters. VW diesel emissions-cheating exposed by U.S. regulators in 2015 triggered global public outrage, dozens more investigations into test-rigging by the wider industry and a push by some lawmakers to ban diesel and eventually all engines. TIGHTENING NOOSE Tesla shares jumped nearly 6 percent on Monday after a Chinese minister said it was a question of when, not if, Beijing bans fossil-fuel cars, tightening the noose around the combustion engine. France and Britain have promised its outright abolition by 2040. But PSA, the maker of Peugeots and Citroens, said it was concerned about the risks if consumers were left behind in the rush, and a new generation of battery cars does not sell.

Mercedes, Nissan and VW slammed by China's CCTV

Several automakers in China, including joint ventures with Nissan, Volkswagen and Mercedes-Benz, are in hot water because their dealers are allegedly overcharging customers for repairs. China Central Television, the country's state broadcaster, leveled the claims during its annual Consumer Day expose. CCTV runs these reports each year on March 15 and often takes aim at foreign companies operating within China. This year the focus fell on automakers, according to the Financial Times, and no domestic car companies were targeted. The network also accused dealers of overselling parts, and it took aim at Jaguar Land Rover specifically for problems surrounding transmission repairs, according to Reuters. The yearly stories are often criticized for focusing on outside businesses. "It panders to a certain type of nationalism as it tends to target foreign companies and rarely touches large state groups or monopolies," Qiao Mu, a journalism professor at Beijing Foreign Studies University, said to the Financial Times. Foreign automakers seem to face tighter scrutiny when doing business in China than their domestic counterparts, in general. The government there investigated several luxury brands, including Audi and BMW, last year for how they supplied spare parts and whether the components were overpriced. Some incurred fines, and Lexus decided to lower its prices. Volkswagen also experienced protests when owners felt the company wasn't handling a recall properly. The CCTV report also comes as many auto dealers in China are feeling a pinch due to high mandated sales targets from automakers. The situation was so dire in early 2015 several brands cut back sales targets and in some cases even paid the sellers to offset poor profits. News Source: Financial Times - sub. req., ReutersImage Credit: Andy Wong / AP Photo Government/Legal Mercedes-Benz Nissan Volkswagen Car Dealers Auto Repair Maintenance jaguar land rover