Volkswagen replaces CEO Mueller, announces new structure

Matthias Muller in the 911 Speedster

VW set to name new chief executive today

Oliver Blume, chairman of Porsche's board of management.

Mueller's replacement with VW brand chief Diess follows slow progress in reorganizing the group's vehicle brands, a key pillar of "Strategy 2025" to transform the Germany's biggest auto company into a leader in cleaner cars and to move on from its diesel emissions scandal of 2015.

Gunnar Kilian who has served as Secretary-General of the Volkswagen Group Works Council until now has been appointed as the new member of the Group Board of Management for Human Resources.

The Volkswagen empire owns the Ducati motorbike brand, Scania buses and trucks, passenger vehicle brands including Skoda, SEAT and Audi (IOB: 0FG8.IL - news), as well as the Bentley, Porsche and Lamborghini luxury marques.

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At a news conference at Volkswagen (VW) group headquarters, Diess sought to play down the extent of planned changes, taking care not to stoke fears over jobs that have caused labour bosses to stifle previous attempted overhauls. The board of directors turned to longtime company employee Mueller, who started at Audi in 1978.

Notwithstanding, in May 2017 prosecutors in Stuttgart said they were exploring Mr. Mueller over doubts he may have thought about the diesel tricking before it ended up open. That project became much more urgent as the diesel scandal generated massive costs, and meant taking on established interest groups.

"It's right for VW to look in a new direction", judged analyst Juergen Pieper of Metzler bank.

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Dieselgate has so far cost VW more than 25 billion euros ($31 billion) in buybacks, fines and compensation, and the carmaker remains mired in legal woes at home and overseas.

The world's largest carmaker shuffled its pack Thursday when it announced that former BMW executive Herbert Diess will replace Matthias Mueller, the former head of Porsche who took over following the diesel emissions scandal in late 2015.

Shares in Volkswagen closed almost two percent higher to 176.60 euros ahead of the closely-watched board meeting, outperforming the Dax index of leading shares that was up almost one percent.

The move is a piece of far-reaching developments declared by the German organization, which likewise possesses a few different brands including Audi and Porsche.

Having joined from BMW just a few months before the cheating became public knowledge, Diess has the advantage of being largely untainted by dieselgate - giving VW a chance at a fresh start.

Described as highly ambitious, Diess has earned a reputation as a fierce cost cutter unafraid of pushing through big changes.

Even with the diesel emission burden to bear and faced with various accusations in the matter from all sides, Müller successfully managed to lead the VW boat through rough waters.

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