Two weeks ago, he was still on stage in Shanghai to talk about software development for the Chinese market in front of visitors to the world's largest auto show. But now it is clear: Dirk Hilgenberg's days as head of the Volkswagen subsidiary Cariad are numbered. According to informed sources, VW CEO Oliver Blume wants to dismiss the 58-year-old software manager. Things are also getting tight for his incumbent management team.

Christian Müßgens

Business correspondent in Hamburg.

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The software dispute in Wolfsburg is thus picking up speed again after problems in the development of new IT systems for vehicles plunged the group into a leadership crisis last year. According to information from the F.A.Z., it is planned that the Cariad supervisory board will decide on Hilgenberg's dismissal at its meeting next Thursday, one day after the annual general meeting of the VW Group.

In addition to Hilgenberg, Chief Technology Officer Lynn Longo and Chief Financial Officer Thomas Sedran are also criticized. Their posts are also wobbly. On the other hand, personnel manager Rainer Zugehör, who is crucial in the highly competitive market of development engineers and also has the trust of the influential IG Metall, is apparently not up for discussion. The news portal "Business Insider", on the other hand, speculates on the dismissal of the entire board of directors of the software division.

VW boss Blume had announced after taking office in September that he wanted to examine the direction of Cariad. After a gallows period for Hilgenberg, the realization has now apparently prevailed that a hard cut is necessary. The intervention is equivalent to an earthquake in Wolfsburg. Originally, Cariad was supposed to be the central unit to develop the entire software architecture of the next model generations in the Group. With the expulsion of top management, the loss of importance is now becoming apparent.

The move is mainly due to pressure from the Audi and Porsche brands, which have been criticizing Cariad's problems for some time. However, a complete end to the unit, which had already been speculated about in the meantime, is apparently not imminent. "If Cariad were shut down, we wouldn't get any cars on the road for the next year and a half," says a manager close to the company. Cariad is too closely interwoven into the development process of the brands. What is clear, however, is that little remains of the original plan of a very strong central unit and that the brands are once again taking over power over software development.

The VW Group is said to have always emphasized that it wants to hold on to Cariad. "For the Volkswagen Group, the expansion of our software expertise is and will remain an important component for the attractiveness of our products." A spokesman refers, among other things, to the 10-point plan with which Blume wants to make the VW Group more efficient. "In the course of this, we have already made decisions and, for example, arranged the software architectures in chronological order." No decisions have been made on personnel changes.

Software problems weigh on the Group

Cariad boss Hilgenberg had once worked for BMW. He had come to the Wolfsburg-based group under ex-VW boss Herbert Diess and had built up the division in its current form. At the beginning, hopes were high. But then Cariad got entangled in more and more technical problems and threw entire vehicle attempts off track. Among others, important models such as the Audi Q6 E-tron and the all-electric Porsche Macan, which are to be launched on the market this year with a massive delay, are affected.

In the management of the Porsche and Audi brands, anger at Cariad had therefore grown over the past two years. Last autumn, the dispute came to a head to such an extent that the then CEO Diess lost his post. His successor Blume, who is also head of Porsche, has now apparently given in to pressure from Stuttgart and Ingolstadt. It is not yet known who will lead Cariad in the future.

Strategy shift under Blume

In Shanghai, the division presented, among other things, a new joint venture for infotainment in vehicles. In other areas, too, she has recently forged more alliances, a departure from Diess' strategy. The aim was to build up as much competence as possible through one's own efforts, with little help from outside. They don't want to become dependent on global tech giants, according to Diess' mantra. In an interview with the F.A.Z., his successor Blume had already made it clear in December that he did not think much of it: "I am open to partnerships. We don't want to and can't do everything ourselves."

In general, Blume wants to lead the group differently than the erratic, unpredictable Diess, more appreciative and more in the team. With the intervention in the software division, however, he is now sending another signal that he does not shy away from tough decisions. First of all, this was evident last year in the Wolfsburg board of directors: the top management team, which was bloated at the time, was downsized. Several managers lost their posts.

The software division Cariad employs more than 6000 people around the world. According to the latest figures from VW, it has currently concluded licensing agreements with the group's brands for the equipment of a good 15 million vehicles, a third more than in the previous year. As in the previous year, the operating loss in 2022 was 400 million euros. This is explained by high start-up investments. Most recently, the goal had been proclaimed to lift Cariad into profitability by 2025 or 2026.