Volkswagen Gearing Up To Replace CEO With VW Brand Head

Unions will get a VW board seat if they agree to Herbert Diess as CEO

Volkswagen will give labor leaders a management board seat as part of a broad agreement to win approval for Herbert Diess as the German carmaker's new chief executive, sources said on Wednesday.

Volkswagen Group has announced Herbert Diess will take the top job at the German vehicle giant as Matthias Mueller steps down after leading the company through the aftermath of the emissions scandal.

Germany's dpa news agency, Handelsblatt business publication and national daily newspaper Bild reported that Mueller would be replaced by Diess, a former BMW executive who joined Volkswagen in 2015.

"Bringing Herbert Diess' CEO nomination forward is the next step in transforming VW into a more modern and effective company", Evercore ISI analyst Arndt Ellinghorst said in a note. The company declined to comment further. As VW's chief executive officer, "conflict will be part of the program".

He was widely seen as the natural successor to Martin Winterkorn, who resigned from the top job five days after the scale of VW's deception over emissions became clear. Its profit margin climbed to 7.4 per cent of sales previous year from 6 per cent in 2015, when the crisis hit.

In the aftermath of the diesel-cheating scandal, Mr Mueller sought to overhaul Volkswagen's rigid top-down management structure, delegating more responsibility to its brand and regional chiefs.

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With a dripfeed of Dieselgate issues continuing to emerge from the embattled company Müller has cut a lonely figure, and a fresh start with a CEO who hasn't spent his whole career at the carmaker could be what's needed.

The company also is replacing its heads of human resources and purchasing.

Diess currently heads the firm's namesake Volkswagen division, but now takes over a larger parent company that owns brands including Porsche, Audi, Bentley, Bugatti and Lamborghini.

He has presided over a wide ranging restructuring of the company and its other brands.

The move comes after Europe's largest automaker 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.

While Mr Mueller is a VW veteran, at times he cuts an uneasy figure in the top job, which required him to manage the often contradictory demands of angry auto owners, disgruntled investors, well-organised workers, as well as state officials with their own political agendas.

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