Volkswagen Set to Oust Müller as CEO After Diesel Scandal

FRANKFURT, Germany — Volkswagen was set on Tuesday to oust Matthias Müller as chief executive as it grapples with a long-running diesel emissions scandal that has cost it billions of dollars, led to the imprisonment of two executives and scarred the German carmaker’s reputation.

Herbert Diess, a former BMW executive who is in charge of cars sold with the Volkswagen brand, was likely to succeed Müller, according to two people with knowledge of the internal discussions. The company said earlier Tuesday that it was considering replacing Müller, and a final decision is expected by the end of the week.

Müller, who took over after the company admitted in September 2015 that it had cheated on diesel emissions tests, has steadfastly denied any knowledge of the deception. The cheating involved the installation of illegal software in 11 million Volkswagen diesel vehicles, playing a major role in creating a serious air pollution problem in Europe.

Diess carries less baggage than Müller, a longtime insider, because he arrived at Volkswagen only a few months before the scandal erupted. And Diess has led Volkswagen’s push to mass produce electric cars, which are seen as essential to the company’s long-term success.

Volkswagen gave no indication about what prompted the management shake-up, 2 1/2 years after the company’s emissions cheating came to light. Under Müller, sales have held up and the company remains profitable.

But Müller struggled to deliver on promises to remake Volkswagen’s authoritarian company culture, while the carmaker continued to suffer blows to its reputation.

Volkswagen remains the target of a wide-ranging criminal investigation that has included searches of Müller’s offices. However, there has been no new revelation that would have prompted Müller to leave now, said Klaus Ziehe, a spokesman for the prosecutors in Braunschweig who are conducting the inquiry.

Widely respected for his knowledge of cars, Müller, 64, is a manager of the old school who has spent his entire career at Volkswagen and its subsidiaries. As someone steeped in the company’s top-down, engineer-oriented culture, he may have been ill-suited to lead wholesale change.

Müller was a high-ranking executive involved in product development at the same time that Audi and Volkswagen were concocting the illegal software and deploying it in vehicles. Müller also worked closely with some of the people under investigation over possible involvement in the emissions conspiracy. Even if ignorant of the wrongdoing, as he has insisted, Müller faced the accusation that he was part of a system that allowed it to take place.

In a statement, Volkswagen said it was considering “a further development of the management structure of the group,” which could “include a change in the position of the chairman of the board of management,” referring to Müller. The company said it had not yet made a final decision to replace him, but merely calling his status into question effectively sealed his fate.

Diess has a shorter history at Volkswagen but would nonetheless satisfy the company’s longtime preference for choosing chief executives from its own ranks.

The scandal, and Volkswagen’s continued vulnerability to it, came into renewed focus after The New York Times reported in January that the company had helped to finance experiments on monkeys in a bungled attempt to show that exhaust from modern diesels was benign.

The experiments, in which monkeys were forced to breathe diesel fumes at a lab in Albuquerque, New Mexico, caused a furor in Germany and elsewhere. Chancellor Angela Merkel condemned the research, the German Parliament debated possible consequences and animal welfare activists demonstrated outside Volkswagen’s headquarters in Wolfsburg, Germany.

Müller promised to change Volkswagen’s corporate culture to be less authoritarian and less prone to the kind of behavior that led to the emissions cheating. At the same time, he presided over a management board still dominated by people who, like himself, were products of that culture.

Critics said that, as a longtime insider, Müller lacked the credibility needed to force change within Volkswagen.

Volkswagen’s stock price rose almost 5 percent, to 172 euros, or about $211, per share, on the news of Müller’s potential departure. They are about 2 percent higher than their value when the company made its diesel admission in 2015. The emissions scandal has had wide-ranging impacts beyond the company.

For one, it has contributed to increased wariness of diesel. The fuel had been seen as more environmentally friendly than gasoline because it emits lower levels of greenhouse gases, but it nevertheless spews out poisonous nitrogen oxides. As a result, cities across Europe have taken steps to restrict the use of diesel vehicles in urban centers, and sales of diesel cars have slowed dramatically across the region.

The diesel cheating and its aftermath has also focused attention on the tight links between Germany’s political elite and the auto industry. Carmakers employ around 800,000 people in Germany and are the country’s highest-value export. But as politicians in Berlin have refused to crack down on car companies, voters have increasingly seen them as complicit with the industry.