Volkswagen names new CEO: Herbert Diess replaces Matthias Mueller

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Volkswagen is seeking to replace Matthias Mueller with the head of its core brand, Herbert Diess, as part of a broader overhaul of its management structure to boost efficiency, two people familiar with the matter said.
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Volkswagen Group, the world’s largest automaker by sales volume, has appointed a new CEO to replace the executive who helped steer the company out of its diesel emissions scandal and into a new era of investment in electric cars.

CEO Matthias Mueller will relinquish his post and will be succeeded by Herbert Diess, who had been serving as CEO of the VW brand and has gained a reputation for cost-cutting at the sprawling company.

The elevation of Diess to the top job was widely expected after he helped reinvent the VW brand as a more profitable enterprise, though Mueller had been expected to serve for a longer period.

Mueller held the top job for more than 2½ years after succeeding CEO Martin Winterkorn, who was ousted days after the company’s diesel pollution scandal was exposed in September 2015.

Mueller charted a course toward a new era of multibillion-dollar investments in electric cars and SUVs, which surprised industry observers who identified VW with its diesel roots and small cars.

In the U.S., Diess steered VW toward new SUVs, including the recently introduced seven-passenger Atlas, which has been well received.

His appointment comes as Volkswagen has largely navigated past an emissions scandal in which the company admitted to rigging some 11 million cars worldwide with software to cheat pollution tests. VW has paid more than $30 billion in fines for the scandal, but the company maintained plans to expand sales in the U.S. despite suffering sales declines.

Mueller “has done outstanding work for the Volkswagen Group,” VW said in a statement. He got the job “when the company faced the greatest challenge in its history. Not only did he safely navigate Volkswagen through that time; together with his team, he also fundamentally realigned the Group’s strategy, initiated cultural change and, with great personal commitment, made sure that the Volkswagen Group not just stayed on track but is now more robust than ever before.”

The appointment of Diess comes as VW investors are clamoring for increased profitability. 

With about 642,000 employees, VW is one of the world’s largest companies in every respect. But it has a vast bureaucracy compared to the more-efficient Toyota, which is a close second in sales but has only 364,000 employees.

More: VW takes nearly $3B extra charge for fixing scandal-tainted U.S. diesel vehicles

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In addition to his job as CEO, Diess will directly oversee vehicle information technology as well as group development and research. He is expected to closely shape VW’s strategy on self-driving cars and electric vehicles.

“Bringing Herbert Diess’ CEO nomination forward is the next step in transforming VW into a more modern and effective company,” Evercore ISI analyst Arndt Ellinghorst said in a note.

Sanford Bernstein analyst Max Warburton said Diess’ track record of cost-cutting points to a more efficient VW under his leadership.

“Herbert Diess was imported from BMW in 2015 and tasked with improving the performance of the VW brand,” Warburton said in a note. “We have previously expressed fears that history might rhyme, and VW might ultimately tire of his medicine. But instead of being squeezed out, he has been pushed upward, and has been made CEO. This is a major development. It’s a sign of real change at VW. And it should be welcomed by investors.”

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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