Diess was the subject of speculation as a possible successor to Winterkorn when he arrived at Volkswagen from BMW less than three months before Winterkorn's sudden departure left the company needing a new CEO in a hurry. Herbert Diess replaces Matthias Muller who is stepping down as chairman by agreement, effective immediately.
Dr. Herbert Diess has been appointed as the Volkswagen Group's Chairman of the Board of Management. "For that, he is due the thanks of the entire Company".
Under the new structure, the vehicle brands will be separated into three core divisions: volume which will include VW, Skoda and Seat; premium which features Audi; and super premium which includes Porsche Bugatti, Lamborghini and Bentley. Diess will be responsible for group research and development, while Porsche CEO Oliver Blume will oversee group production and will now belong to the Group's top governing body.
Diess, a former BMW executive, has had the hard task of negotiating restructuring and cost-cutting with German worker representatives since becoming head of the Volkswagen brand in 2015.
"Matthias Müller has laid the groundwork for our transformation", said Diess in a statement. "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".
"In a phase of profound upheaval in the automotive industry, it is vital for Volkswagen to pick up speed and make an unmistakable mark in e-mobility, the digitalisation of the automobile and transportation, as well as new mobility services".
The "dieselgate" scandal - in which VW admitted to installing software in 11 million diesel vehicles worldwide to cheat regulatory emissions test - has so far cost it more than 25 billion euros ($31 billion) in buybacks, fines and compensation.
Mueller followed a course toward a new era of multibillion-dollar investments in electric cars and SUVs, which surprised industry observers who identified VW with its diesel roots and small cars.
Volkswagen will also have a separate China division, with Diess saying that managing the company's largest market from Germany was not the right choice. It said the head of purchasing, Francisco Javier Garcia Sanz, was leaving at his own request and that his post would be filled on an acting basis by Volkswagen brand purchasing head Ralf Brandstaetter. He replaces Dr. Karlheinz Blessing.