Published: Fri, April 13, 2018
Markets | By Josh Butler

VW names Diess CEO in sweeping overhaul to set future course

VW names Diess CEO in sweeping overhaul to set future course

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.

Volkswagen replaced Mueller after he failed to refocus the group's portfolio of vehicle brands, a key pillar of "Strategy 2025" to transform the company into a leader in cleaner cars after the diesel emissions scandal of 2015.

The restructuring means Diess also will take over a parent company that includes auto brands Porsche, Audi, Bentley, Bugatti and Lamborghini.

Volkswagen on Tuesday announced it was considering reshuffling its board and replacing Mueller, in a move that sent stocks in the company surging.

He apologized for the scandal and launched what was described as an effort to make the company's management more open to discussion and less top-down, factors that may have abetted the emissions cheating. Amid opposition from labour leaders, he failed to sell motorbike maker Ducati previous year.

Mr Diess joined VW from German rival BMW in mid-2015, shortly before the scandal erupted publicly.

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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 a year ago.

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

Diess's appointment comes two days after a company statement that was as surprising as it was cryptic, saying that Mueller had agreed "in principle" to contribute to a management change, without elaborating or mentioning his chosen successor by name.

Mueller "has done outstanding work for the Volkswagen Group", VW said in a statement. The latest results showed that the core VW brand posted sharply increased profits for 2017, even if the costs for dealing with the diesel emissions scandal remained high across the group.

The source noted, however, that Diess still wanted to nominate an "operative director on the brand-level to cover for him in the day-to-day business".

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

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