VW will pick Porsche chief Mueller as next CEO, reports say

BERLIN (Reuters) -- Volkswagen Group's supervisory board will pick Matthias Mueller, the head of sports-car maker Porsche, as its next CEO to succeed Martin Winterkorn, a source familiar with the matter told Reuters. 

Mueller, the VW group's former head product strategist, has majority support on the 20-member supervisory panel that meets on Friday, the source said.

The Wall Street Journal is also reporting that Mueller will get the job.  

Winterkorn resigned on Wednesday after almost nine years at the helm of Europe's biggest carmaker after VW was found manipulating emissions equipment in the U.S.

Mueller, 62, has led Porsche since 2010. He is backed by members of the Porsche-Piech family that controls a majority stake in Volkswagen.

"He is a good choice even though he may be seen as a transitionary CEO until another internal candidate such as VW brand CEO Diess has earned their stripes," said Arndt Ellinghorst, an analyst at Evercore ISI investment banking advisory firm.

He said Mueller's priority would be to renew VW's leadership, restructure costs and turn VW into a "performance-driven company where management was more accountable."

Mueller started at Audi as a toolmaking apprentice in the early 1970s, and his focus in recent years has been away from the VW and Audi brands named in the diesel affair.

In addition, sources told Reuters that Volkswagen will dismiss its U.S. chief executive, Michael Horn, on Friday and create a special position for the United States on its management board.

Winfried Vahland, head of VW's Czech division, Skoda, is the top candidate to take charge of VW's U.S. operations, two sources said. Horn’s impending dismissal was told to Reuters by a source familiar with the matter earlier today.

A VW of America spokeswoman declined to comment, calling reports of Horn’s pending dismissal “speculation."

Possible successors to Winterkorn also included Herbert Diess, a former BMW executive who took over the newly created post of VW brand chief this year, a person familiar with the matter said.

The new CEO will take charge as Volkswagen seeks to regain the trust of consumers and rebuild a brand tarnished by scandal. The company’s admission that millions of its “clean diesel” cars have software intended to defeat emissions tests has wiped nearly 20 billion euros ($22.4 billion) off its market capitalization since last Friday.

Winterkorn’s departure “was necessary for the company, for the workers, for the region, for Germany’s car industry, but it’s only a first step,” said Guenter Lach, a Christian Democrat lawmaker who worked at VW for four decades and represents voters from the automaker’s home base of Wolfsburg.

“Volkswagen has been shaken to the core. The company now stands at the beginning of a long, painful series of corrective actions.”

Mueller has led Porsche since 2010 and could be put into place as an interim CEO to stabilize Volkswagen until a longer-term candidate can be groomed, said Arndt Ellinghorst, an analyst at Evercore ISI in London. Mueller started at Audi as a toolmaking apprentice in the early 1970s, and his focus in recent years has been away from the VW and Audi brands named in the diesel affair.

Ellinghorst said that if Mueller were chosen, he might quickly be succeeded by Diess, 56, or Volkswagen trucks chief Andreas Renschler, 57.

“They need fresh people, a new system,” Ellinghorst said. "They need to become more flexible, and the leadership culture needs to change."

Diess spent 18 years at BMW, including stints running purchasing and model development. He left the luxury-car maker at the end of 2014 after production chief Harald Krueger was named to succeed Norbert Reithofer as CEO. Renschler worked at Daimler for 25 years and started at Volkswagen in February.

Skoda candidate

Another potential candidate who had been mentioned was Winfried Vahland, the 58-year-old head of Skoda, the Czech brand owned by Volkswagen, said Sascha Gommel, an analyst with Commerzbank in Frankfurt.

A completely new face was unlikely given the voting power held by just a few shareholders.

The Porsche and Piech families control 51 percent of the carmaker through their holding company Porsche Automobil Holding SE, while the state of Lower Saxony, where Volkswagen is based, owns another 20 percent. Neither has shown much interest in hiring an outsider. And labor leaders with a vested interest in a CEO who will protect jobs, as Winterkorn did, hold half the seats on the supervisory board.

Volkswagen set aside 6.5 billion euros ($7.3 billion) on Tuesday in an initial tally of the potential cost of its deception of regulators and customers about emissions of diesel engines installed in 11 million cars worldwide -- more vehicles than it sells in a year.

“Volkswagen looks like a Gulliver, pinned to the ground, unable to move,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “The strings need to be removed.”

Bloomberg and Automotive News staff contributed to this report.