VW Group appoints Porsche’s Matthias Müller as CEO

Scandal-hit Volkswagen has appointed Porsche brand chief Matthias Müller as its new chief executive.

The 20-person supervisory board named Mr Müller, a company veteran for four decades who enjoys the support of the family that controls VW as well as the automaker’s influential union leaders, sources said.

The company has also announced a major restructuring of its Group the departure of top executives in a sweeping overhaul to begin repairing the carmaker’s image tarnished by rigged emissions tests. However there has been no confirmation of dismissals as previously speculated in reports.

The 62-year-old Müller takes charge as Volkswagen seeks to regain the trust of consumers and regulators after admitting to rigging engines to circumvent pollution controls.

The crisis wiped about €20 billion off VW's market value this week, forcing chief executive officer Martin Winterkorn to step down on Wednesday as the scandal widened and opened the door for the exit of other top managers.

Among the major changes announced on Friday evening was the appointment of Skoda boss Winfried Vahland (58) to head Volskwagen Group of America, the arm at the centre of the cheating scandal.

It is also creating a Porsche brand group with Bentley and Bugatti coming under its control. Lamborghini andDucati will remain as part ofthe Audi business line. However it may mean a greater sharing of platforms and technology across the sports car brands, and the creation of a Porsche-led group strengthens the position of Müller's former arm of the VW Group.

Meanwhile well-regarded Audi executive Luca de Meo (48), who was lured from Fiat-Chrysler to head sales and marketing at the premium german brand, is now taking on the job of running Seat.

Mr Müller was already touted as a potential CEO successor when former chairman Ferdinand Piëch failed in a bid to oust Mr Winterkorn in April. He has run the maker of the 911 sports car since October, 2010.

Like his predecessor, Mr Müller is a long-serving Volkswagen employee, joining the Audi division as a toolmaking apprentice in the early 1970s. To repair VW’s image, Mr Müller will have to move quickly to get into the public’s eye – a task better suited for his cool, cosmopolitan demeanour than that of the stiff and autocratic Mr Winterkorn.

“For the next 12 months or so, he’ll be a problem-solver who’ll have to credibly drive this process internally and represent it publicly,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler.

While the current challenge is significant, Mr Müller has experience dealing with critical audiences. As Porsche boss, he attended classic-car events to connect with purists and justify expanding into mainstream segments with models like the Macan compact SUV.

Under his watch, profit rose 62 per cent over four years, and deliveries are on track in 2015 to surpass 200,000 vehicles for the first time.

To succeed he’ll also have to dismantle “fortress Wolfsburg,” Mr Pieper said, referring to the automaker’s centralised oversight, which funnels decisions through its headquarters.

“The challenge will be how to break up a bureaucratic culture, so that people can speak up when there’s a problem, even if it means they won’t meet a deadline and they won’t make market share,” said Lynn Wooten, associate dean at the University of Michigan’s Ross School of Business.

“How do you rebuild that reputation now and change the culture at the same time? That’s going to be the two major challenges.”

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- Bloomberg