Volkswagen AG Plans to replace Chief Executive Officer Mueller

Volkswagen flags potential major management changes

Despite facing billions in fines, vehicle refits and lawsuits relating to its "dieselgate" scandal, Volkswagen's operating results have been robust, with sales and profit hitting record highs past year. Chancellor Angela Merkel condemned the research, the German Parliament debated possible consequences, and animal rights activists demonstrated outside Volkswagen's headquarters in Wolfsburg.

Volkswagen is expected to make a final decision regarding the future of its top executive in Matthias Muller by the end of the week amidst the company's costly diesel emissions scandal. At the same time, he presided over a management board still dominated by people who, like himself, were products of that culture.

Mueller's contract with the German carmaker is set to run until 2020, but it confirmed on Tuesday that it was considering a change of leadership as it looked to complete a broader management overhaul.

News of replacing Mueller moved shares upward.

Diess, who has a doctorate in assembly automation and spent eight years on BMW's executive board, came to VW with high ambitions.

Matthias Mueller, CEO of the Volkswagen Group, could be replaced by as soon as this Friday, if a report out of Germany proves to be correct.

Diess, 59, studied vehicle technology and mechanical engineering in Munich from 1977 until 1983 and worked for Bosch [ROBG.UL], the world's largest auto supplier, before joining BMW in 1996.

At the time of his appointment, Volkswagen said Diess was "the ideal candidate" to revive the VW brand, which lagged rivals Toyota (7203.T), Renault-Nissan (RENA.PA) (7201.T), General Motors (GM.N) and Ford (F.N) on profitability.

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.

Volkswagen said in a short statement that board of directors Chairman Hans Dieter Poetsch was in discussions with top managers about their duties and that the result was "currently open".

Representatives of Porsche and the German state of Lower Saxony, VW's two largest shareholders, weren't immediately available for comment.

German newspaper Handelsblatt first reported that Diess would replace Mueller. Mueller's total compensation was more than 10 million euros a year ago.

Bloomberg's Eyk Henning contributed.

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