Former BMW executive Herbert Diess could be the new boss of the Volkswagen within days. File photo: Michael Sohn / AP
Former BMW executive Herbert Diess could be the new boss of the Volkswagen within days. File photo: Michael Sohn / AP

VW set to appoint new boss in boardroom shake-up

By Andreas Cremer and Jan Schwartz Time of article published Apr 11, 2018

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Wolfsburg, Germany - Volkswagen is poised to replace chief executive Matthias Mueller with the head of its core VW brand, Herbert Diess, insiders say, as it looks to give fresh impetus to its recovery from an emissions scandal.

The carmaker said on Tuesday, ahead of a supervisory board meeting expected on Friday, that it was considering a change in leadership as part of a broader management overhaul. The 64-year-old Mueller's contract is due to run until 2020, but sources say he's been accused of weakness in his decision-making.

Insiders are saying the firm's human resources manager is also set to go. Personnel chief Karlheinz Blessing's successor is likely to be Gunnar Kilian, the current secretary general of VW's works council.

In addition to leadership changes, modifications to the structure of the firm are also expected, though further details remain unclear. One possibility is increased autonomy for the group's various regional and brand divisions.

The move comes after Volkswagen has been hampered by infighting among its powerful stakeholders, which include the Porsche and Piech families, the German state of Lower Saxony, and labour leaders.

Labour clashes

Mueller, a company veteran, was installed at short notice in 2015, a week after the company admitted to cheating US diesel emission tests, prompting criticism from some investors who said that only an outsider could rebuild trust in the business.

He launched an ambitious reform plan, including investing billions of euros in electric vehicles, but has struggled to push through changes aimed at creating a more efficient and focused company. Amid opposition from labour leaders, Mueller failed to sell motorcycle company Ducati in 2017.

It is unclear how soon Diess, a former BMW executive who joined Volkswagen in July 2015 and has clashed with the company's labour leaders, might replace Mueller. Unions and Lower Saxony together have the power to block his appointment.

Robust results

Despite facing billions in fines, vehicle refits and lawsuits relating to its "Dieselgate" scandal, Volkswagen's operating results have been robust under Mueller's watch, with sales and profit hitting record highs in 2017.

But the persistent tug of war between its controlling families, unions and other stakeholders have made it difficult to drive through structural changes that investors have said are key to the company fulfilling its potential.

Mueller has expressed frustration with the pace of Volkswagen's transformation and more recently about his ability to turn around the brand's image following revelations the company had tested toxic fumes on monkeys.


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Volkswagen said on Tuesday Mueller had expressed his general willingness to participate in a management overhaul, and it was still to be determined whether efforts to develop a new leadership structure would leave him in place.

It said chairman Hans Dieter Poetsch was in talks about changing the structure with fellow supervisory board members and members of the management board. Mueller's possible replacement will is likely face similar challenges to get Volkswagen's stakeholders to unite.

Diess, 59, has focused his reforms at the Volkswagen brand on procurement and process management to bring its cost structure and efficiency closer to that of rival Toyota, but stopped short of making sweeping job cuts.

Diess and Mueller instead agreed to guarantee Volkswagen's German jobs until 2025 to get labour approval for a plan to turn the carmaker into a mass producer of electric cars. Previous executives who attempted deeper cuts in Volkswagen's homeland, including Bernd Pischetsrieder and Wolfgang Bernhard, were forced out of office or stifled in their reform efforts.

The debate about Volkswagen's future structure comes a month after its largest shareholder, Porsche, picked three new representatives of the Porsche and Piech families to help oversee Volkswagen.

Volkswagen declined to comment on whether the board was poised to name Diess as new CEO. The works council, whose members occupy half the seats on the supervisory board, also declined comment.


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