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As Diesel Scandal Fades, VW Is Planning to Replace Its CEO

April 10, 2018, 1:05 PM UTC

Volkswagen AG is planning to replace Chief Executive Officer Matthias Mueller with Herbert Diess, the head of the namesake brand, people familiar with the matter said.

The change will be discussed at a supervisory board meeting on Friday, said the people, who asked not to be identified speaking ahead of an official announcement. A VW spokesman could not immediately be reached for comment. The shares jumped as much as 4.7%.

VW (VLKAY) said in a statement earlier on Tuesday that Chairman Hans Dieter Poetsch is currently in discussions with top executives and supervisory board members about management board changes and that Mueller, 64, has “showed his general willingness to contribute to the changes.” The release did not provide any specifics.

In tapping Diess for the top job, Volkswagen would elevate a senior executive from its own ranks, while at the same time relying on a relative outsider to run the company. Diess joined VW from southern-German rival BMW in mid 2015, months before the diesel crisis erupted. As the executive overseeing VW’s biggest unit, he routinely butted heads with the powerful labor union as he sought to cut costs and simplify the byzantine structure of the carmaker.

In the aftermath of the diesel-cheating scandal, Volkswagen has been pushing to overhaul its rigid top-down management structure, delegating more responsibility to its brand and regional chiefs. Its complex structure has extended to its main shareholder, Porsche Automobil Holding SE, where Volkswagen’s chairman serves as the CEO and Mueller also serves as a top executive. Porsche said separately any changes at VW would have a knock-on effect for it.

Including Mueller, VW’s management board totals nine people, with responsibilities ranging from purchasing to legal affairs to financing and human resources. Meanwhile, Audi, the namesake VW brand, the trucks division and the group’s Chinese operations also have representatives on Volkswagen’s top executive body.

“It is currently open whether the considerations and discussions will lead to a further development of the management structure or to personnel changes,” VW said in the statement.

Representatives of Porsche and the German state of Lower Saxony, VW’s two largest shareholders, weren’t immediately available for comment.