Going, going, gone? Matthias Mueller's days at VW seem to be over

Berlin (Germany) (AFP) - German car giant Volkswagen is set to replace chief executive Matthias Mueller Thursday, as it seeks to turn the page on the “dieselgate” emissions scandal that has dogged the company since 2015.

The supervisory board of the world’s leading carmaker was to begin meeting from 5:00 pm (1500 GMT) with an announcement expected “late in the evening”, a source close to the company told AFP.

The group said in a statement that it would hold a press conference at its Wolfsburg headquarters Friday at 10:30 am (0830 GMT).

Volkswagen surprised markets earlier this week when it revealed it was considering reshuffling its board and replacing Mueller.

Mueller had “signalled he was open to play a part in the changes” in conversations with supervisory board chief Hans Dieter Poetsch, the company said.

German business newspaper Handelsblatt and national news agency DPA reported Herbert Diess, head of the VW brand – one of the group’s 12 makes of cars, trucks and motorbikes – was slated to take Mueller’s place.

- Dieselgate fallout -

Mueller, a former chief executive of sportscar-building VW subsidiary Porsche AG, was brought in to replace Martin Winterkorn in 2015 and was contracted to serve until 2020.

Longtime CEO Winterkorn quit days after the firm admitted to installing software in 11 million diesel vehicles worldwide designed to cheat regulatory emissions tests in a scandal that became known as “dieselgate”.

Herbert Diess presenting the Volkswagen I.D, a 100% electric car, in 2016 as VW sought to diversify away from diesel in the wake of the "dieselgate" scandal

Mueller, 64, has steered the mammoth carmaker into a massive restructuring, aiming to offer electric versions of many of its models and slim down its operations over the coming decade.

But he has himself landed in prosecutors’ sights over suspicions he may have known about the cheating before it became public and failed in his duty to inform investors.

And while he brought VW’s share price and profits back up to pre-crisis levels, observers say he made little progress in shaking up the firm’s famously hierarchical corporate culture, which some critics believe discouraged employees from speaking up about the diesel scam.

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

Diess, known as a “very good cost manager”, would be “the best solution as a successor for the next five years,” he said.

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

- ‘Ambitious cost cutter’-

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 abroad.

The dieselgate scandal has proved costly for VW, although the company has quickly returned to being strongly profitable

Suspicions of emissions cheating have also spread to other carmakers, shattering diesel’s image as a clean engine and prompting several smog-clogged German cities to mull diesel driving bans.

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.

In addition to taking on the top job, the 59-year-old Austrian is expected to stay on as VW brand chief.

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

“Diess has no problem making enemies,” the Sueddeutsche Zeitung daily wrote, recounting how the “tough-as-nails” executive drove a hard bargain with suppliers as head of purchasing at BMW.

VW’s supervisory board meeting is also expected to see human resources chief Karlheinz Blessing replaced by works council executive Gunnar Kilian.

German media say such a move would be interpreted as a goodwill gesture towards union leaders, with whom Diess has had a tense relationship.

One of Diess’s biggest challenges as he takes the helm at VW will be to clarify the group’s vision for the future as the auto giant navigates between a pivot towards electric vehicles and clinging to the diesel technology it has invested so heavily in over the years.

Just last month, Diess said: “We need diesel, diesel has a future.”