Volkswagen Expected to Replace CEO Matthias Mueller This Week -- 4th Update

By William Boston 

BERLIN -- Volkswagen AG's supervisory board is expected to vote on Friday to replace Chief Executive Matthias Müller with VW brand chief and former BMW AG executive Herbert Diess, according to people familiar with the situation, a surprising shake-up after the German auto maker endured a crisis that cost it billions of dollars.

Mr. Müller, who formerly ran Volkswagen's sports-car marque, Porsche AG, became CEO in September 2015 in the wake of the disclosure in the U.S. that the company, which is listed but partially state-owned, had rigged millions of diesel-powered cars to cheat emissions tests.

Such a change would mark a surprising turn of events for Mr. Müller, who was credited with steering the world's biggest car maker by sales through its most difficult crisis, accelerating its strategy to develop electric vehicles and self-driving cars, and returning it to robust profits.

As part of Volkswagen's recovery, Mr. Müller pushed a radical move into electric cars. The strategy was opposed by many long-serving Volkswagen executives and engineers, but appeared to have the backing of the board of directors.

But over the past few months, Mr. Müller appears to have lost the trust of the controlling Porsche and Piech families, according to the people familiar with the situation.

In an interview with The Wall Street Journal last year, Mr. Müller spoke openly about selling the Ducati motorcycle brand, owned by Audi, angering the Piech and Porsche families, according to one of the people.

Mr. Müller also said about EUR20 billion ($24.6 billion) of Volkswagen's EUR231 billion in annual revenue came from businesses it no longer considered core and which were up for disposal, angering the families and representatives of the IG Metall trade union, which has 10 seats on the 20-member supervisory board.

Mr. Müller is known for his strong opinions and candid speech, which has angered some members of the controlling families. Last year, for example, Mr. Müller broke ranks with the rest of the German auto industry and called on the government to end tax subsidies for diesel cars and shift that money into supporting development of electric vehicles.

"But it's not just the families," the person said on condition of anonymity. "The families alone couldn't push this change, they need the support of Lower Saxony and Qatar."

The German state of Lower Saxony, where most of Volkswagen's German operations are located, holds about 20% of the company's voting stock. Qatar Investment Authority holds slightly less.

"It looks like the families may just think things aren't moving fast enough anymore and it's time for a change," the person said on condition of anonymity.

Despite Volkswagen's yearslong struggle with its diesel-emissions scandal, the company has performed strongly under Mr. Müller. He led it past Toyota Motor Co. to become the world's biggest auto maker by volume. Profits -- while dented by fines, costs and other liabilities related to its emissions troubles -- have been strong.

Volkswagen's shares were 4.0% higher Tuesday afternoon.

Earlier Tuesday, Volkswagen said in a short statement it was considering changes to its senior-management structure, including possible changes to Mr. Müller's position and responsibilities. The company said Mr. Müller "showed his general willingness to contribute to the changes." The German car maker said the review may not lead to actual changes in management structure or personnel.

Write to William Boston at [e-mail]

(END) Dow Jones Newswires

April 10, 2018 10:41 ET (14:41 GMT)

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