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Volkswagen to replace CEO with VW brand chief Herbert Diess

As Diesel Scandal Fades, VW Is Planning to Replace Its CEO

The automaker, almost three years later, is still struggling to put the scandal behind it. Mueller's contract ends in 2020.

A representative of the German state of Lower Saxony, another of the largest shareholders, was not immediately available for comment on the appointment.

Mr Diess, 59, has been prepared for the role after being headhunted from BMW in 2015 less than three months before the revelation that VW had fitted 11 million diesel cars worldwide with "defeat device" software created to cheat official emissions tests.

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 labor leaders, Mueller failed to sell motorbike maker Ducati a year ago.

Volkswagen AG said in the statement that Hans Dieter Poetsch, which is the chairman of the company, is discussing with top executives and board members regarding changes about management board. He has led the company through the scandal to record sales and strong profits.

The issue with restructuring VW lies with a tug a war between interested parties including the controlling families, stakeholders, and unions. Prior to joining the Wolfsburg-based automaker in 2015, Diess was BMW's head of development, and is widely credited with slashing costs. But when Winterkorn fell, he had only been with the company for less than three months.

Matthias Mueller, who was brought in following the diesel emissions scandal in September 2015, has "showed his general willingness to contribute to the changes", according to a company statement.

Volkswagen is considering a management shakeup that could mean replacing its current CEO Matthias Mueller.

"If Diess is confirmed as the successor, VW shares will extend their gains", Evercore ISI analyst Arndt Ellinghorst said, who has an "outperform" rating on the stock.

News of replacing Mueller moved shares upward.

Kilian, who works directly under labor boss Bernd Osterloh, will replace personnel chief Karlheinz Blessing, the sources said, giving workers representatives a direct say on strategy and cost-cutting.