The dismissal of the head of Audi after the German carmaker fell behind its competitors

Volkswagen is replacing the head of Audi after concerns that one of the German automaker’s most profitable brands will lag behind its rivals has led to rising tensions among executives within the division.

Audi said Thursday that Gernot Dollner, who is currently chief strategy at Volkswagen, will take over as CEO of the Ingolstadt-based automaker from Markus Dussmann, starting in September.

While Audi remains one of Volkswagen’s best-performing brands, Volkswagen executives in Wolfsburg were concerned that the company was failing to keep up with rivals BMW and Mercedes-Benz in software and e-mobility. Questions have been whether the company can still live up to its mantra Vorsprung durch Technikwhich means “advancement through technology,” according to industry executives.

A particular sticking point has been the company’s software issues, which have already caused a delay in the launch of its Q6 e-tron electric car.

This strained the relationship between Duesmann and some of his top executives to the point that a coach was brought in to help facilitate discussions at meetings, according to the German business management magazine.

“Maybe he should have spent more time explaining and getting everyone on the same page,” said a confidant of Dussmann of the rebellion against him.

The decision to dismiss Duesmann, which VW will retain as a consultant, was taken at a meeting of the group’s supervisory board on Thursday. Talks about a reshuffle at Audi “have been going on for weeks,” one person said.

Wolfgang Porsche, chairman of Volkswagen’s supervisory board, said he saw in Döllner “a versatile manager who has successfully mastered many projects in the Volkswagen Group”.

The announcement is the second senior appointment by Volkswagen CEO Oliver Blume since taking over the role last year. In May, there was a change of leadership for the arm of Volkswagen’s Cariad programme.

In a meeting with investors last week, Blum noted that Audi’s current lineup of cars in China, VW’s most important market, was not competitive enough.

While Audi sales in China have rebounded, the majority of cars delivered are combustion engine models, with the Q4 e-tron being Audi’s only electric car for sale in the country.

Declining sales in China amid growing competition from homegrown Chinese brands such as BYD is one of the biggest problems Blum faces as he tries to transform the world’s second-biggest automaker for the new age of electric vehicles.

Audi also lags behind BMW and Mercedes-Benz in the US, as both sell more cars in the country.

While Duesmann is largely pleased with Audi’s shift of focus to electric vehicles, VW management didn’t trust him to successfully oversee the planned launch of 20 new models over the next three years, according to a person close to the ousted Audi boss.

VW’s management team saw Duesmann as a strategist “and we’re now at a point where we might need someone more focused on the product,” said that person.

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