Volkswagen to replace CEO with its brand chief

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The holding company Porsche SE also announced in a separate statement changes in its own management structure as a result from a general corporate shake up in the Volkswagen Group.

Volkswagen (VOWG_p.DE) will give labor leaders a management board seat as part of a broad agreement to win approval for Herbert Diess as the German carmaker's new chief executive, sources said on Wednesday.

Further details are emerging over an expected management shake-up at German auto giant Volkswagen AG, ahead of a supervisory board meeting expected on Friday. In response to the company's decision to initiate a change in leadership, Mueller had expressed willingness to be a part of the overhaul.

Volkswagen AG is planning to replace Chief Executive Officer Matthias Mueller with Herbert Diess, the head of the namesake brand, people familiar with the matter said.

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Volkswagen CEO Matthias Mueller makes a statement, following a meeting ahead of deadline to inform USA regulators on plans to comply with standards, at the VW factory in Wolfsburg, Germany November 20, 2015.

Mr Mueller, a former Porsche boss, replaced Martin Winterkorn, who stepped down as the diesel scandal rocked the automotive industry.

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 previous year. The announcement comes in the wake of a scandal in which the company was accused of fitting its diesel engines with devices to pass emissions tests.

After-tax profit rose to 11.6 billion euros ($14.3 billion) a year ago, on sales of 230.6 billion euros.

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Last month, Mueller said that chief executives of big companies deserved high pay because "one always has one foot in jail".

Diess, 59, has focused his reforms at the VW brand on procurement and process management to bring its cost structure and efficiency closer to that of rival Toyota 7203.T , but stopped short of making sweeping job cuts. This could also include a change in the position of the chairman of the Board of Management.

The contract of Mueller, 64, who took the reins at VW a week after the "dieselgate" scandal broke in September 2015, runs out in 2020. About 482,000 were sold in the USA, and 11 million around the world.

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