Volkswagen chief tells shareholders car giant performing well in hard times

Shareholders to rubber stamp a roughly €9.6bn special dividend following the listing of Porsche

CEO of VW and Porsche car maker Oliver Blume, right, and finance CEO Lutz Meschke ring the bell during the start of Porsche's market listing in September.

Volkswagen shareholders renewed their criticism of CEO Oliver Blume's dual roles, even as they prepared to rubber stamp a roughly €9.6bn special dividend following the listing of Porsche.

Mr Blume, who became group chief executive in September, has continued as CEO of luxury brand Porsche even after its listing, prompting concerns among some investors about the pressures on his time and potential conflicts of interest.

At a shareholder meeting to approve the special dividend, Mr Blume said Volkswagen was performing well in hard times, with his first 100 days spent on tasks such as reshuffling senior roles, defining its strategy for China and North America, and revising its software and platform strategy.

Yet shareholders including DWS and investor association SdK criticised his dual role, with DWS saying governance issues were dragging down Volkswagen's valuation.

"We don't want a part-time CEO — neither at the mother, nor the daughter company," said Hendrik Schmidt of DWS, which holds 2% of Volkswagen shares. 

"You are constantly putting on different hats. It is hard for us to believe that this works at board meetings," said SdK representative Mark Liebscher.

Porsche shares have risen 18.5% since late September, while Volkswagen shares have risen by less than 4% in the same period.

Responding to the shareholders on Friday, Mr Blume defended his position. "I will keep both roles long-term," he said.

Mr Blume said Volkswagen was diversifying its global presence in light of geopolitical tensions and a decision on a planned battery plant in Eastern Europe, which was postponed last week, would come soon.

Record energy prices in Europe and high subsidies on offer in the US have stirred unease among European policymakers that investments planned in Europe will instead be made abroad.

Still, Mr Blume said the location in Eastern Europe would soon be announced, while the carmaker was also looking for a battery plant in Canada.

"We are working on a globally balanced presence — in Europe, China and a strong third leg of North America," Mr Blume said. 

Volkswagen finance chief Arno Antlitz said earlier this week he expected next year to be “even more challenging” than 2022 as inflation and a worsening economic outlook cut into demand.

Mr Antlitz said VW will need to improve productivity and lower fixed costs as the carmaker can’t fully pass on soaring raw material and energy costs to consumers.

While he expects the industry to continue to grow, Mr Antlitz said it would be in the single digits. 

VW is under pressure to turn around its electric vehicle push. 

• Reuters and Bloomberg