Herbert Diess will become Volkswagen’s (ETR: VOW3) new CEO, replacing Matthias Müller who will step down immediately.
Diess will head the shakeup of the company, who are to create six new business areas and a special portfolio for China.
“My most important task will now be to join with our management team and our group workforce in consistently pursuing and pushing forward our evolution into a profitable, world-leading provider of sustainable mobility,” he said in a statement.
Diess’s new position at the group has been met with optimism by analysts.
Nord LB analyst Frank Schwope said: “Diess is a man of action. He is the most plausible choice at VW to lead the group into the next phase of its transformation.”
The new CEO will replace Müller, who did not successfully refocus the Volkswagen’s portfolio of car brands, which was a key pillar of “Strategy 2025” to transform the company after the diesel emissions scandal.
Diess, who is a former BMW AG (ETR: BMW) executive, plans major cost-cutting at the group whilst also focusing on the development of new technologies.
Sanford Bernstein analyst Max Warburton wrote: “There have been historic episodes where cost cutters have been brought in to sort out the namesake VW brand, but who then leave or are squeezed out before their work is really done.”
“Instead of being squeezed out, he has been pushed upward, and has been made CEO. It’s a sign of real change at VW.”
Volkswagen’s decision to slim down has come amid Fiat (NYSE: FCAU) and Daimler’s (ETR: DAI) move to strip off from non-core assets and cut costs.
Goldman Sachs analysts have estimated £140 billion worth of “hidden value” in the European auto sector, which can be gained through portfolio simplifications.