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VW's new CEO treads carefully on road to reform, to consider asset sales

A renowned cost-cutter, Diess took over from Matthias Mueller on Thursday

Reuters  |  WOLFSBURG/BERLIN, Germany 

Herbert Diess
New CEO of Volkswagen Herbert Diess | Photo: Reuters

Volkswagen's new embarked on the most far-reaching shake-up in the carmaker's history on Friday, seeking to unite a company whose feuding factions have often slowed reform.

At a news conference at (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.

"This is an evolution and not a revolution," Diess, 59, told journalists, setting out plans to carve up VW into new divisions, adding that details still needed to be worked out over the coming months.

"The creation of has been under consideration for a while," he said about the biggest overhaul since VW became a under former Ferdinand Piech, a grandson of VW Ferdinand

However, analysts welcomed signs of genuine movement at Europe's largest automaker where changes to corporate structure have often fallen foul of warring stakeholders. VW has also had to pay out billions of euros in fines following its 2015 emissions cheating scandal.

"This is all we could have asked for, and expect the market to take the news positively," said in a note on Friday.

Shares in were up 0.7 percent to 177.88 euros by 1415 GMT, against a similar rise for the automotive index.

Facing the media

Dressed in a dark blue suit and a burgundy tie, Diess and were the only executives to field questions about the carmaker, even though VW announced a raft of new appointments on Thursday.

boss who becomes of sales for the entire group and who becomes of production, and the company's new HR chief, were notably absent.

Diess, who has been of the VW brand since moving from in 2015, will also assume direct responsibility for research and development and vehicle connectivity.

Blume, Stadler and take on production, sales and IT in what is reminiscent of a set-up that has worked well at FiatChrysler.

"We want to create a slimmed down company with strong brands," Diess said, explaining that would form the group's core brand in the premium segment with a goal of overtaking Mercedes-Benz and

Blume will up a "super premium" cars division which groups Bentley, Porsche, and possibly Lamborghini, which is currently integrated with

Diess himself will lead a "volume brands" segment which consists of VW, Spanish brand Seat, Czech division Skoda and VW commercial vehicles.

"Bundling brands in groups greatly helps to increase synergies," said "The trick is to bring down costs where that is possible," he said, citing development and marketing budgets.

Upon being asked what could happen to engine maker and Renk, Diess said the company has assets which will be subject to a review. Whether these businesses will be invested in or sold off remains to be seen, Diess said.

The company's procurement and component divisions would also be combined as part of the revised structure, Diess said.

Labour blessing

A renowned cost-cutter, Diess took over from on Thursday, thanks to an unprecedented pact with VW's powerful labour bosses, handing them a on the company's management board.

He was installed after Mueller's attempts to reshape the automotive group foundered amid labour opposition, including his plans to sell motorbike brand Mueller had taken on the job days after the "Dieselgate" scandal broke in Sept. 2015.

VW will not cancel Mueller's contract, meaning the 64-year-old can still expect to pocket millions in the next two years despite being out of the job before his contract expires in 2020. Mueller last year earned about 10 million euros in pay and benefits.

VW's powerful labour chiefs took pains to endorse the new boss ahead of Friday's news conference.

"We are convinced that, with Diess, we have the right man on board," works said in a letter to employees on Friday.

Osterloh's comments come after repeated clashes over Diess's drive to cut costs and improve profits at the carmaker's core VW brand, where Diess was handed the reins only three months before the Dieselgate scandal erupted.

Diess appeared to be on his way out last year at VW after a rare public clash with Osterloh. The had accused Diess of betraying workers and trying to use the emissions scandal as a pretext for pushing through job cuts.

"Back then, we were not immediately on the same page," Osterloh said in his letter. "But, as is well known, that issue was laid to rest a long time ago."

First Published: Fri, April 13 2018. 22:08 IST