VW set to replace CEO in management overhaul

CEO Matthias Mueller presenting Volkswagen's electrification initiative at an industry event last month. He is set to be replaced before the carmaker's annual general meeting on May 3, the Bild newspaper said yesterday.
CEO Matthias Mueller presenting Volkswagen's electrification initiative at an industry event last month. He is set to be replaced before the carmaker's annual general meeting on May 3, the Bild newspaper said yesterday.PHOTO: REUTERS

German carmaker hopes to hasten recovery from emissions scandal

BERLIN • Volkswagen is poised to replace chief executive Matthias Mueller with Mr Herbert Diess, the head of its core VW brand, two people familiar with the matter said.

The German carmaker is hoping the change at the top will give fresh impetus to its recovery from a multibillion-dollar emissions cheating scandal . It said on Tuesday it was considering a change in leadership as part of a broader management overhaul, but gave few details.

The 64-year-old Mr Mueller will be replaced before Volkswagen's annual general meeting on May 3, the Bild newspaper said yesterday.

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.

Mr 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 to create a more efficient and focused company. Amid opposition from labour leaders, he failed to sell motorbike maker Ducati last year.

Mr Diess, a former BMW executive who joined VW in July 2015, has clashed with the company's labour leaders. Unions and Lower Saxony together have the power to block his appointment.

Volkswagen is due to discuss a stock market listing for its truck and bus division at a supervisory board meeting tomorrow, two people close to the carmaker said, in another move aimed at creating a more focused business.

That plan comes as rivals, including Fiat Chrysler and Daimler, consider spin-offs or legally separate divisions to boost their share prices and raise cash to fund development of electric and self-driving cars.

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

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

Volkswagen on Tuesday said Mr 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. His contract is due to run until 2020.

Chairman Hans Dieter Poetsch is in talks about changing the structure with fellow supervisory board members and members of the management board, Volkswagen said.

Mr Diess will likely face similar challenges to get Volkswagen's stakeholders to unite.

The 59-year-old has focused his reforms at the VW 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. He and Mr Mueller instead agreed to guarantee VW's German jobs until 2025, to get labour approval for a plan to turn the company into a mass producer of electric cars.

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 12, 2018, with the headline 'VW set to replace CEO in management overhaul'. Print Edition | Subscribe