Volkswagen poised to axe boss Matthias Mueller

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This could also include a change in the position of the chairman of the Board of Management. The 64-year-old Mueller has two years left on his current contract. Shares in Volkswagen surged in Tuesday afternoon trading, adding as much as five percent on the day before paring their gains to around 4.0 per cent at a price of 170.84 euros around 3:30 p.m. It comes just a few weeks after Mueller presided over improved earnings, with operating profit excluding special items past year rising to 17 billion euros ($21 billion). Diess joined VW from German rival BMW in mid-2015, shortly before the scandal erupted publicly. Unions and Lower Saxony together have the power to block his appointment.

Volkswagen Group says it is contemplating a management reshuffle that raises questions about CEO Matthias Mueller's future with the company.

Its profit margin climbed to 7.4% of sales in 2017 from 6% in 2015, when the crisis hit.

VW said earlier on Tuesday that it was considering a change in the CEO job.

Mueller has expressed frustration with the pace of Volkswagen's transformation and more recently about his ability to turn around the brand's image following revelations the company had tested toxic fumes on monkeys.

454,000 units were delivered on the continent in the three-month period, a 6% rise compared to the 428,200 figure recorded a year ago.

The holding company Porsche SE also announced in a separate statement changes in its own management structure as a result from a general corporate shake up in the Volkswagen Group.

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Mueller's possible replacement will likely face similar challenges to get Volkswagen's stakeholders to unite.

Diess and Mueller instead agreed to guarantee VW's German jobs until 2025 to get labour approval for a plan to turn the carmaker into a mass producer of electric cars.

Including Mueller, VW's management board totals nine people, with responsibilities ranging from purchasing to legal affairs to financing and human resources.

"Investors will like his strong execution track record and his understanding of mobility 2.0", Evercore ISI analyst Arndt Ellinghorst said, referring to a shift away from vehicle ownership to alternatives like car-sharing. According to the company, final decision is expected to be made by the end of the week.

Last year, powerful labor chief Bernd Osterloh changed tack, telling a German newspaper that the dispute with Diess over how to implement reforms at the brand has been laid to rest and that the two sides aimed to "enter calmer waters".

Volkswagen chose not to comment on Handelsblatt's information.