VW Board to Consider Most Sweeping Changes Since Diesel Scandal

(Bloomberg) -- Volkswagen AG’s supervisory board is meeting a day earlier than planned in its attempt to push through a change in top management and organization, after a rushed statement left more questions open than answered

The directors -- including members of the controlling Porsche and Piech clans, the prime minister of Germany’s Lower Saxony region and labor leaders -- will gather at headquarters in Wolfsburg later Thursday to consider the biggest reorganization since 2015.

Back then, a power struggle and diesel emissions cheating scandal were engulfing the company, leading to the tumultuous exits first of Chairman Ferdinand Piech and later in the year of Chief Executive Officer Martin Winterkorn. In a few hours, the board will deliberate on yet another change in CEO and a plan to streamline VW’s unwieldy 12-brand portfolio.

“It’s more orderly this time, but the changes are comparable to the Piech-Winterkorn exits,” said Warburg Research analyst Marc-Rene Tonn. “The mooted changes in the structure could help make the ship a little faster and reduce complexity.”

Here’s what’s on the menu for the VW directors:

New Blood

CEO Matthias Mueller is expected to be replaced by Volkswagen brand chief Herbert Diess, who will concentrate power in a dual role as group chief and head of the company’s namesake marque, according to people familiar with the plans. Word of the surprise move came Tuesday from the carmaker in a hastily published and cryptic press release.

Mueller, 64, who took over from Winterkorn to lead the company out of the diesel crisis, will have his tenure cut short by two years after key stakeholders sought faster changes, such as the overhaul of VW’s trucks division. While the automaker has reported stellar earnings, the former head of the Porsche nameplate has made repeated public missteps and grown weary of regular grillings by board members.

Lanky Bavarian

Diess, 59, has gained the trust of the Porsche and Piech family shareholders who control Volkswagen by fixing problems at its flagship unit, according people familiar with the matter. Overcoming VW’s complex internal politics, he survived a spat with powerful labor leader Bernd Osterloh, who publicly questioned his credibility in contract talks.

Diess ultimately secured a landmark deal paving the way to cut as many as 30,000 jobs and save 3.7 billion euros ($4.6 billion), putting the world’s biggest carmaker on firmer ground for the industry’s shift to self-driving and electric cars.

Truck IPO

Board approval for the streamlining of VW’s portfolio could set the stage for a partial listing of the truck and bus unit, which shares little or no overlap with marques like Porsche or Audi. A move to revamp the heavy-vehicle business could provide the division access to capital markets, including options for a partial listing and bond sales. Granting it more independence would help build confidence among investors that VW is considering deeper organizational changes, heralding more efficiencies in the wake of the diesel-emissions scandal.

Bundling Brands

The board will also consider rejigging other parts of Volkswagen’s brand portfolio to try to strike a balance between creating closer ties between mass market nameplates like Skoda and Seat for cost-savings and letting them stand on their own for faster decision-making. A new grouping would differentiate mass market, premium and high-end sports car units. VW has gone back and forth on shaping the brand portfolio over the years.

Management Changes

Gunnar Kilian may replace personnel director Karlheinz Blessing. A close confidant of union leader Osterloh, his appointment would place labor influence at the heart of Volkswagen management. Head of procurement Francisco Javier Garcia Sanz will leave the post, Automobilwoche reported, without saying where it got the information. Porsche CEO Oliver Blume, 49, will join.

--With assistance from Christoph Rauwald

To contact the reporter on this story: Elisabeth Behrmann in Munich at ebehrmann1@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Tara Patel, Tom Lavell

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