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Volkswagen to replace CEO with VW brand chief: sources

Reuters  |  BERLIN/HAMBURG 

By and Jan Schwartz

BERLIN/HAMBURG (Reuters) - is poised to replace with the of its core brand, Herbert Diess, two people familiar with the matter said, as it looks to give fresh impetus to its recovery from an emissions scandal.

The German carmaker said on Tuesday it was considering a change in leadership as part of a broader management overhaul, but gave few details. The 64-year-old Mueller's contract is due to run until 2020.

The move comes after Europe's largest automaker has been hampered by infighting among its powerful stakeholders, which include the and families, the German state of Lower Saxony, and labour leaders.

Shares in jumped on the news, and closed up 4.5 percent at 171.58 euros.

Mueller, a company veteran, was installed at short notice in 2015, a week after the company admitted to cheating U.S. diesel emission tests, prompting criticism from some investors who said that only an outsider could rebuild trust in the business.

He launched an ambitious reform plan, including investing billions of euros in electric vehicles, but has struggled to push through changes aimed at creating a more efficient and focused company. Amid opposition from labour leaders, Mueller failed to sell last year.

It is unclear how soon Diess, a former who joined in July 2015 and has clashed with the company's labour leaders, might replace Mueller. Unions and Lower Saxony together have the power to block his appointment.

is due to discuss a stock market listing for its trucks and bus division at a supervisory board meeting on Friday, two people close to the carmaker said - another move aimed at creating a more focused business.

That plan comes as rivals including and consider spin offs or legally separate divisions to boost their share prices and raise cash to fund development of electric and self-driving cars.

FRUSTRATION

Despite facing billions in fines, vehicle refits and lawsuits relating to its "dieselgate" scandal, Volkswagen's operating results have been robust under Mueller's watch, with sales and profit hitting record highs last year.

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

Mueller has expressed frustration with the pace of Volkswagen's transformation and more recently about his ability to turn around the brand's image following revelations the company had tested toxic fumes on monkeys.

Volkswagen's shares have outperformed the European autos sector index <.SXAP> by 10 percent over the past three years, and recovered to pre-dieselgate levels last year.

said on Tuesday Mueller had expressed his general willingness to participate in a management overhaul, and it was still to be determined whether efforts to develop a new leadership structure would leave him in place.

is currently in talks about changing the structure with fellow supervisory board members and members of the management board, said.

Mueller's possible replacement will likely face similar challenges to get Volkswagen's stakeholders to unite.

Diess, 59, has focused his reforms at the brand on procurement and to bring its cost structure and efficiency closer to that of rival <7203.T>, but stopped short of making sweeping job cuts.

Diess and Mueller instead agreed to guarantee VW's German jobs until 2025 to get labour approval for a plan to turn the carmaker into a of electric cars.

German magazine on Tuesday reported that Volkswagen's board member for human resources, Karlheinz Blessing, may be replaced by Gunnar Kilian, who worked directly under VW's

The move would be a major concession by management to worker representatives, potentially handing labour leaders insight into management plans for investments and cost cutting plans.

Previous executives who attempted deeper cuts in VW's homeland, including and Wolfgang Bernhard, were forced out of office or stifled in their reform efforts.

'BETTER APPOINTMENT'

Mueller's likely departure comes two days after , another pillar of corporate Germany, dismissed its chief executive, John Cryan, in pursuit of a more rapid turnaround following years of losses.

"If Diess is confirmed as the successor, shares will extend their gains," said, who has an "outperform" rating on the stock.

"We see no better alternative to to make the company fit for the future."

German newspaper first reported that Diess would replace Mueller. Other potential candidates include Volkswagen's and veteran

The debate about Volkswagen's future structure comes a month after its largest shareholder, Automobil Holding , picked three new representatives of the and families to help oversee

declined to comment on whether the board was poised to name Diess as new The works council, whose members occupy half the seats on the supervisory board, also declined comment.

(Writing by Edward Taylor; Editing by Mark Potter and Emma Thomasson)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Wed, April 11 2018. 00:28 IST
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