Published: Fri, April 13, 2018
Finance | By Cynthia Curry

VW Group ousts CEO, names Diess as replacement, announces restructuring

VW Group ousts CEO, names Diess as replacement, announces restructuring

Reuters reported that the proposed change comes as current VW Group CEO Mathias Muller is about to be replaced by Herbert Diess in a move created to speed up reform and restructuring in the vast company.

The German carmaker is hoping the change at the top will give fresh impetus to its recovery from a multibillion-dollar emissions cheating scandal.

Senior works council members a year ago had their salaries cut and bonuses suspended after public prosecutors investigated alleged overpayments at the carmaker, a move that labor leaders are blaming on Blessing, one source said.

Mueller, 64, was head of Volkswagen's richly profitable Porsche division when he unexpectedly was handed the CEO job in September 2015.

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. Amid opposition from labor leaders, Mueller failed to sell motorbike maker Ducati previous year. "Unions and Lower Saxony together have the power to block his appointment". The company sold a record 10.74 million vehicles, making it the world's largest carmaker, though the title is disputed by the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million and says Volkswagen is counting trucks that aren't cars.

The automaker's share price has since recovered, but some lawsuits are still pending.

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"In a phase of profound upheaval in the automotive industry, it is vital for Volkswagen to pick up speed and make an unmistakable mark in e-mobility, the digitalization of the automobile and transportation as well as new mobility services", the new CEO added.

On Tuesday, Mueller indicated his "basic willingness to play a part" in possible changes in the firm's leadership after a VW press release announced that the company was mulling changes within its top management echelons. His contract is due to run until 2020.

"The Volkswagen Group's goal is and remains to align the Company and its brands with future needs, to safeguard its position among the leaders of the global automotive industry with innovativeness and profitability, and to be instrumental in shaping tomorrow's personal mobility with the strength of our Group brands", said Chairman of the Supervisory Board, Hans Dieter Pötsch.

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

Since then, Diess has worked to overcome the reputational damage from the emissions cheating scandal, as well as to cut costs and increase profits at the core Volkswagen brand.

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