Volkswagen to pick Porsche boss as new CEO

Matthias Mueller, CEO of Porsche AG and Executive Board Member of Porsche Automobil Holding SE arrives for the company's annual news conference in Stuttgart, Germany, in this October 19, 2010 file photo.[Photo/Agencies]

BERLIN - Volkswagen will name Matthias Mueller, the head of its Porsche sports car brand, as its chief executive as it tries to recover from a scandal over its rigging of US vehicle emissions tests, a source close to the matter said.

Mueller, 62, has been widely tipped to succeed Martin Winterkorn, who quit on Wednesday, when the German carmaker's supervisory board meets on Friday, and will take responsibility for the biggest business crisis in Volkswagen's 78-year history.

Shares in the world's largest carmaker by sales have plunged as much as 40 percent since Friday, when US regulators said it had admitted to cheating emissions tests on diesel cars.

VW also faces a battle to restore the confidence of customers and motor dealers who have expressed frustration at a lack of information from the company about how they will be affected by the scandal.

Mueller has a majority on the 20-member supervisory panel, the source said. Volkswagen declined to comment.

The board will also dismiss the head of the company's US operations and top engineers at its Audi and Porsche brands, a senior source told Reuters, as it seeks a fresh start.

Mueller is a management board member of Porsche SE and so is close to the Piech-Porsche family that controls Volkswagen through the holding company. He also spent many years at Audi.

"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 renew VW's leadership, restructure costs and turn VW into a "performance-driven company" where management was more accountable."

VW said on Tuesday about 11 million of its cars worldwide were fitted with the software that was found to be cheating emissions in the United States. The US Environmental Protection Agency has said Volkswagen could face penalties of up to $18 billion.

However, the crisis is still deepening. Germany's transport minister, Alexander Dobrindt, said on Thursday Volkswagen had manipulated tests in Europe as well as the United States.

Dobrindt told reporters vehicles with 1.6 and 2.0 litre diesel engines were" affected by the manipulations that are being talked about," but did not say how many were affected.

The company is under pressure to act decisively, with German Chancellor Angela Merkel urging it to quickly restore confidence in a business held up for generations as a paragon of German engineering prowess.

"There will be further personnel consequences in the next days and we are calling for those consequences," Volkswagen board member Olaf Lies told the Bavarian broadcasting network.

The research and development chiefs of Audi and Porsche, Ulrich Hackenberg and Wolfgang Hatz, will be removed by the supervisory board, as will Volkswagen's top executive in the United States, Michael Horn, the senior source told Reuters.

Hackenberg and Hatz had both held senior posts at VW in development, including of engines, before they switched to Audi and Porsche. They are among VW's highest-ranking engineers.

Horn acknowledged this week that the company had "totally screwed up" by deceiving US regulators about how much its diesel cars pollute.