The new boss of the world’s largest automobile manufacturer is a passionate motorcyclist who played a key role in transforming BMW Motorrad into the highly profitable entity it is today. Dr. Herbert Diess, 59, was officially announced as being the new Chairman of the Board of Management of Volkswagen AG on April 12, with immediate effect. As such, he will have overall responsibility for the future direction of Ducati, which VW bought in 2012 while Diess was still at BMW.
Herbert Diess is a lifelong bike rider, and a native of BMW’s home city of Munich. After a brief stint in academic research, he joined Stuttgart-based industry supplier Robert Bosch AG in 1989. From there, he was recruited by BMW in 1996 to head up their structural planning division, and was then dispatched to the UK in 1999 to join the turnaround team charged with transforming the company’s ailing Rover subsidiary. There, while continuing to clock up the miles exploring Britain on his personal R1100RT, Diess was put in charge of putting the new Mini into production at Rover’s Oxford plant. As a reward for his contribution to the huge commercial success of the Mini, he was promoted in February 2003 to become President of BMW’s motorcycle division.
In this role, Diess oversaw the development and marketplace launch of no less than seventeen new BMW models in just 36 months. The plan generated a dramatic increase in turnover and profit, with BMW Motorrad’s volume breaking the one billion Euro barrier for the first time in 2005, and annual production the 100,000-unit mark in 2006. He repositioned the BMW brand by transforming the marque’s appeal, and vastly broadened its customer base by appealing to more youthful customers with new platforms like the K1200 fours, Rotax-engined F800 parallel-twins and G650 singles. Diess’s youth-focused vision also inspired creation of the the first competition BMW off-road single, the G450X hard enduro model, as well as BMW’s acquisition of the iconic Husqvarna off-road brand.
Diess also led the redevelopment of the company’s core Boxer range, introducing the larger-capacity 1170cc family in 2005, headed by the dual-purpose R1200GS which swiftly became a global best-seller. The R1200RT tourer and R1200ST sports tourer followed soon after. Then came the high-end HP2 category, starting with the HP2 Enduro, followed by the HP2 Megamoto. This led to BMW announcing in April 2007 that it’d be returning to road racing officially by entering a factory team in Endurance races with a Sport Boxer, which in 2008 it productionised as the HP2 Sport. This was a forerunner to BMW’s entry into the World Superbike series in 2009 with the four-cylinder S1000RR, development of which had begun under Diess’s direction.
By October 2007 BMW Motorrad production was at an all-time high, with record sales and spiralling profits thanks to a constant flow of individual new models, and Diess’s five-year plan aimed at repositioning Europe’s largest motorcycle manufacturer about to be completed with the arrival of the S1000RS Superbike. The company had seen its previously worthy but frankly rather staid range of bikes transformed in terms of performance and allure. For the first time it now incorporated the same sporty appeal as the products of its car division. But in that month Diess left BMW Motorrad, having been promoted to the giant German auto manufacturer’s main board.
There, Diess was initially appointed Director of Purchasing and Supplier Network for BMW AG. He was instrumental in BMW weathering the 2008 financial crisis by squeezing more than 4 billion Euros out of supply costs. Then in 2012 he took charge of the R&D Department, but in spite of his stellar contribution to the Group’s performance and ongoing growth, he was ultimately passed over for the top job in BMW AG. Instead the Head of HR, Harald Krüger was appointed CEO in December 2014. That spurred Herbert Diess to join Volkswagen as head of the brand’s passenger car division. The move was announced in July 2015 just weeks before the Dieselgate crisis erupted – a scandal with deep ramifications for the entire German automotive industry.
This meant that the extended period of gardening leave which Herbert Diess‘s BMW contract would normally oblige him to take was waived by his previous employers. The decision prevented him from undertaking his planned trip of a lifetime, riding a motorcycle from the Arctic Circle in Alaska to Cape Horn in Argentina.
Instead, VW’s costly Dieselgate embarrassment meant he had to postpone this trip indefinitely to take over the helm of the largest entity in VAG immediately, as a clean pair of hands unconnected with the scandal. He turned the VW brand around by overhauling the R&D department, and reining in costs. Volkswagen’s car division doubled profit margins to 4.1% in 2017, up from 1.8% the previous year, andDiess became a key proponent of a plan to attack BMW and Tesla in the EV market.
Now, a major reshuffle within the VW Group has seen Herbert Diess replace former Porsche boss Matthias Muller as the Chairman of the Board. It’s part of the biggest shake-up of the German car giant since the Dieselgate scandal erupted in 2015. A widespread business restructure will see the company and its brands – VW, SEAT, Skoda, Lamborghini, Bugatti, Audi, Bentley, Porsche, and Ducati – split into three groups; Volume, Premium and Super Premium. The move is aimed at speeding up decision-making processes within the company.
SEAT, Skoda and light commercial vehicles will comprise the Volume segment, while VW and Audi become the Premium brands. Porsche will lead the Super Premium category, which also includes Bentley, Bugatti and Lamborghini. Ducati also falls into that class, as it falls under the Lamborghini umbrella.
While the Italian motorcycle subsidiary’s current strong performance will place it lower down the list for Diess to intervene in, be sure that his passion for motorcycles will see VAG’s new boss take a close interest in the Italian company’s future. In particularly in the field of electric two-wheelers, with which he’s familiar from his time at BMW.
Herbert Diess has been rightfully feted for successfully transforming BMW Motorrad. He turned it from a niche manufacturer of quirky but worthy models into a major industry player with a full range of well-engineered products. In an interview with me in 2006, he explained the basis of his approach back then:
“BMW is a relatively small manufacturer,” he declared, “with a market share of around 7-8% worldwide, which is not so big compared to a Japanese company. But we saw some further growth potential available with the right products. So, in the same way as our car division is seen as a sporting brand, there was growth potential for sportier BMWs on two wheels, too. That’s the way it’s turned out, because in 2005 when we really picked up momentum, we grew by 5.6% in volume in terms of units sold. This is quite exceptional because the European market over the previous five years only grew by 1%, and the world market by just 4%. In one year, we grew volume by nearly Euro 200 million, which is the turnover of a small or midsized European motorcycle manufacturer, so this makes us believe the strategy is right.”
Too true – as evidenced by the way the company continued to continue growing substantially after his 2007 departure. The world of motorcycling had cause to regret Dr. Diess’s departure – but now he’s back again, though with other things in his mind as well. Still, Ducati CEO Claudio Domenicali and his colleagues at Borgo Panigale can be sure that Ducati will benefit from Herbert’s attention before very long…