POAHY Porsche Automobile Holding SE (PK)

By William Boston 

FRANKFURT-- Volkswagen AG on Friday named Porsche chief Matthias Müller as its next chief executive, capping a dramatic week in which Europe's biggest car maker was engulfed by an emissions-testing crisis and lost a third of its market value.

The company's major shareholders and labor representatives met for nearly eight hours behind closed doors before appearing briefly to announce Mr. Müller's appointment. In his first comments as CEO of the embattled car maker, he vowed to get to the bottom of an emissions scandal that has shattered trust in Volkswagen and threatens to undermine the company's business at a time when key markets are weakening.

"My most urgent task is to win back trust for the Volkswagen group--by leaving no stone unturned," he said. "Under my leadership, Volkswagen will do everything it can to develop and implement the most stringent compliance and governance standards in our industry."

Volkswagen also announced a sweeping reorganization of its business in North America, the epicenter of the emissions crisis, and changed the leadership subsidiaries Skoda and Seat. Luca de Meo, Audi sales chief, will take the helm at Spanish car maker SEAT, while Bernhard Maier, Porsche's marketing chief, will become head of Czech car maker Skoda.

Michael Horn will remain head of Volkswagen of America, despite speculation he would lose his job. But the regional organizations in the U.S., Mexico and Canada will be part of a larger holding company, the North America organization, modeled after Volkswagen's fairly autonomous China business organization. The move is aimed to give the North American management more autonomy and the ability to make faster decisions.

Winfried Vahland, 58, who transformed Czech car maker Skoda into one of Europe's fastest-growing companies, will take the helm of the VW North America group and join the management board of the VW brand.

Before the meeting, people close to the company said the board also was expected to announce the resignations of three senior engineers, including Ulrich Hackenberg, father of Volkswagen's innovative modular manufacturing system, and Wolfgang Hatz, head of research and development at Porsche AG. Both men were close confidantes of Martin Winterkorn, who resigned his post as CEO under pressure this week.

But the supervisory board made no mention of the men specifically, saying only that some executives would be suspended until their innocence in the emissions-testing scheme could be proven.

In the wake of disclosures last week by U.S. environment authorities that VW cheated on emissions tests of some of its most popular vehicles, the company suddenly found itself facing a raft of potential lawsuits, criminal investigations and as much as $18 billion in possible fines.

The news shocked investors, sparking a frenzied selloff of Volkswagen shares that shaved a third off the company's market value. Volkswagen shares recovered some when it emerged on Thursday that Mr. Müller, the outspoken and respected Porsche chief, would take the helm at Germany's biggest company. The stock, though, fell again Friday, dropping 3.1% to EUR115.94 in Frankfurt trading.

Mr. Müller, who began his career as an apprentice toolmaker at Audi, must come to terms with running a company of massive size and influence. Mr. Müller will oversee a EUR200 billion-in-sales auto maker that produces inexpensive Czech-made Skoda cars, mainstream brands like Spain's SEAT and its world-known Volkswagen models, as well as luxury vehicles from Bentley and Audi, and sports cars from Porsche, Lamborghini and Bugatti.

What began 78 years ago as a project to churn out low-cost Beetles has evolved into a global empire that sells 10 million cars a year, produced at more than 100 factories from China to Chattanooga, Tenn., and employs more than half a million people.

Mr. Müller was born in Chemnitz, in East Germany, and moved to the West as a child. Today, he sports a crop of white hair and enjoys the confidence of the Porsche-Piëch clan that controls the company. He became CEO of Porsche in 2010, returned the brand to Le Mans racing and oversaw its rapid sales expansion with sport-utility vehicles.

"We have worked together very long and in close confidence," said Wolfgang Porsche, grandson of Beetle founder Ferdinand Porsche, whose family, together with the family of his cousin Ferdinand Piëch, holds a controlling stake in the company. "The Porsche-Piëch family stands behind Volkswagen without any ifs, ands or buts."

Write to William Boston at william.boston@wsj.com

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(END) Dow Jones Newswires

September 25, 2015 14:34 ET (18:34 GMT)

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