In a significant development, Volkswagen announced the stepping down of its Chief Executive Herbert Diess, with its chief operating officer Ralf Brandstaetter replacing him.

The management reshuffle comes in the wake of squabbling between Volkswagen’s powerful labour leaders and its managers over the pace and scale of cost cutting reforms in order to free up resources as it readies to shift gear towards the production of electric cars.

In a statement Volkswagen said, Brandstaetter would take over as its CEO from July.

“Ralf Brandstaetter is one of the company’s most experienced managers,” said Diess in a statement. “I am therefore very pleased that Ralf Brandstaetter will be forging ahead with the development of the brand as CEO.”

Diess will however continue to retain overall responsibility for Volkswagen’s passenger cars business. The management reshuffle will also see the departure of VW’s procurement and components head Stefan Sommer.

In 2018, Sommer joined VW and oversaw its ambitious procurement plans including the construction of its large factories which will play a key role in Volkswagen’s ambitious electrification drive.

Earlier on Monday, sources said Volkswagen’s supervisory board had held an extraordinary meeting to discuss the replacement of Diess as its CEO.

Diess is making efforts to get VW’s labour leaders, who control nine of the 19 seats on the supervisory board, to agree to painful costs cuts.

Categories: Creativity, Entrepreneurship, HR & Organization, Strategy