VW names new boss to steer sweeping overhaul

Tuesday, 24 April 2018 00:00 - - {{hitsCtrl.values.hits}}

Berlin (Reuters): Volkswagen has chosen Herbert Diess as its new Chief Executive in an overhaul that includes streamlining the company’s multiple car brands into just three groups while preparing its truck business for a potential listing.

The plans were announced after Volkswagen Board of Directors ousted Matthias Mueller as CEO and discussed ways to overhaul the company, which spans motorbikes, buses, trucks and passenger car brands including Ducati, Bentley, Porsche, Audi, Scania and Skoda.

Mueller’s replacement with VW Brand Chief Diess follows slow progress in reorganising the group’s car brands, a key pillar of “Strategy 2025” to transform the Germany’s biggest car company into a leader in cleaner cars and to move on from its diesel emissions scandal of 2015.

For Volkswagen, it is the biggest overhaul since it became a multi-brand conglomerate under former Chief Executive Ferdinand Piech, a grandson of VW Beetle designer Ferdinand Porsche.

Under the plans, announced on 12 April, Volkswagen will divide itself into six new business areas, plus a portfolio for China, as part of an effort to decentralise responsibility and improve efficiency.

The carmaker will prepare its truck and bus division for “capital market readiness” by making it a public limited company as a prelude to a potential listing, confirming a Reuters report from last month.

The new car brands will be Volume, Premium and Super Premium. Earlier on 12 April, sources had told Reuters that VW would reorganise its brands into these groups.

Analysts welcomed the appointment of Diess, a former BMW executive who has more than doubled profitability at the VW brand since taking charge in 2015.

“Diess is a man of action. He is the most plausible choice at VW to lead the group into the next phase of its transformation,” said Nord LB Analyst Frank Schwope who has a “buy” rating on Volkswagen.

Separately, VW said Works Council Executive Gunnar Kilian, a close aide to Labour Boss Bernd Osterloh, will replace Group Human Resources Chief Karlheinz Blessing, who will stay at VW as an adviser. Earlier this week, sources told Reuters that Kilian would replace Blessing

Purchasing Chief Francisco Javier Garcia Sanz, the longest-serving top executive at VW, will leave the company, the carmaker said.

VW will tighten leadership duties within the group and empower the heads of the three vehicle categories to take on company-wide responsibilities.

With VW’s core namesake brand shouldering the bulk of development spending within the group, Diess will also become responsible for R&D activities across the group. Luxury division Audi CEO Rupert Stadler will take charge of group sales.

Newly appointed to the Group Executive Board, Sports car brand Porsche Head Oliver Blume will oversee production at the multi-brand organisation, VW said, confirming a Reuters report.

Diess, Stadler and Blume will also take charge of the new groups Volume, Premium and Super Premium, respectively, VW said without giving more details.