Rising in the ranks: VW brand chief Herbert Diess is to be promoted to CE, sources say. Picture: REUTERS
Rising in the ranks: VW brand chief Herbert Diess is to be promoted to CE, sources say. Picture: REUTERS

Munich/Frankfurt — Volkswagen (VW) is set to name the head of its namesake brand, Herbert Diess, as its next CEO to succeed Matthias Mueller, in a surprise shake-up of top management after emerging from the years-long diesel crisis.

The supervisory board will vote on the change in top leadership at a meeting on Friday, according to people familiar with the matter, who asked not to be identified speaking ahead of an official announcement.

Mueller has two years left on his contract.

The shares jumped as much as 5% in Frankfurt.

In tapping Diess for the top job, VW would elevate a senior executive from its own ranks while at the same time handing the reins to someone who was not at the vehicle maker when the diesel cheating took place. Diess joined VW from southern German rival BMW in mid 2015 just before the scandal erupted.

As the executive overseeing VW’s biggest unit, Diess routinely butted heads with the powerful labour union as he sought to reduce costs and simplify the Byzantine structure of the car maker.

"The potential change in CEO comes as a surprise," Christian Ludwig, a Bankhaus Lampe analyst, said by phone. "I don’t see an obvious trigger that would have prompted this."

Under Mueller — who was promoted to the top job in the chaotic days following the public disclosure of cheating in emissions tests — VW has weathered the blows from the scandal while at the same time embarking on an aggressive expansion into electric cars.

Its profit margin climbed to 7.4% of sales in 2017 from 6% in 2015, when the crisis hit.

The car maker also managed to fend off Toyota Motor to retain its status as the world’s largest vehicle maker.

A VW spokesman could not immediately be reached for comment on the expected promotion of Diess. VW said earlier on Tuesday that it was considering a change in the CEO job. Chairman Hans Dieter Poetsch is leading the process and Mueller has "showed his general willingness to contribute to the changes", the company said.

In the aftermath of the diesel-cheating scandal, VW has been pushing to overhaul its rigid top-down management structure, delegating more responsibility to its brand and regional chiefs.

Its complex structure has extended to its main shareholder, Porsche Automobil Holding, where VW’s chairman serves as the CEO and Mueller also serves as a top executive.

Porsche said separately any changes at VW would have a knock-on effect for it.

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

Including Mueller, VW’s management board totals nine people, with responsibilities ranging from purchasing to legal affairs to financing and human resources. Audi, the namesake VW brand, the trucks division and the group’s Chinese operations have representatives on VW’s top executive body.