Volkswagen’s Diess goes from lame duck to top dog in two years

As Volkswagen AG fought for its survival two years ago, Herbert Diess — a fresh hire from BMW AG — appeared headed for a rapid exit after a standoff with the company’s powerful labor unions over cost-cutting measures. Today, he’s poised to take VW’s top job.

Early in Diess’ tenure as head of the VW car brand, labor leader Bernd Osterloh publicly questioned his credibility in contract talks, raising concerns that he might fall victim to the carmaker’s complex internal politics, which has toppled many high-profile newcomers.

But Diess, a lanky, coolheaded Bavarian, never got ruffled and ultimately secured a landmark deal that paved the way to cut as many as 30,000 jobs and save 3.7 billion euros ($4.6 billion). In the process, he earned the trust of the Porsche/ Piech clan that controls the company by fixing problems at its flagship unit, according people familiar with the matter.

“Diess is ready to weather conflict, which is important to make things happen in a company like Volkswagen,” said Ferdinand Dudenhoeffer, director of the University of Duisburg-Essen’s Center for Automotive Research. As VW’s chief executive officer, “conflict will be part of the program.”

Volkswagen, which has a history of rocky management handovers, has decided to replace Matthias Mueller, 64, with the 59-year-old Diess, according to people familiar with the matter, who asked not to be identified speaking ahead of an official announcement. The surprise leadership switch is due to be finalized at a supervisory board meeting on Friday, the people said.