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Porsche exec likely to take the wheel at Volkswagen amid emissions scandal

Volkswagen will name Matthias Mueller, the head of its Porsche sports car brand, as its chief executive, a source close to the matter said on Thursday, as the fallout from the U.S. vehicle emissions rigging scandal broadened.

Matthias Mueller will succeed outgoing chief executive Martin Winterkorn

Former Volkswagen CEO Martin Winterkorn (left) quit Wednesday amid the emissions scandal enveloping the automaker. A source says that Porsche CEO Matthias Mueller (right) will replace him at the helm of the beleaguered firm. (Thomas Kienzle/AFP/Getty)

Volkswagen's supervisory board is meeting Friday to discuss who to name as CEO after Martin Winterkorn resigned this week over an emissions-rigging scandal that's rocking the world's top-selling automaker.

Matthias Mueller, the head of its Porsche sports car brand, is expected to take over as Volkswagen's chief executive.

Mueller, 62, has been widely tipped to succeed Martin Winterkorn, who quit on Wednesday, when the German carmaker's supervisory board meets on Friday. He will take responsibility for steering Volkswagen through the biggest business crisis in its 78-year history.

The crisis deepened on Thursday as officials in Europe and the United States stepped up their investigations.

Germany's transport minister said Volkswagen had manipulated tests in Europe too.

"We have been informed that also in Europe, vehicles with 1.6 and 2.0 litre diesel engines are affected by the manipulations that are being talked about," Alexander Dobrindt told reporters, adding it was unclear how many vehicles in Europe were affected.

Road tests, random checks

Dobrindt said Europe would agree on new emissions tests in coming months that should take place on roads, rather than in laboratories, and that random checks would be made on all manufacturers.

Separately, a group of at least 27 U.S. state attorneys general launched a multi-state investigation of Volkswagen's representations to consumers about its diesel vehicles, and said it will send subpoenas to the automaker.

"There will be further personnel consequences in the next days." - Volkswagen board member Olaf Lies

"I am furious that the world's leading car company wilfully took steps that polluted our environment and deceived consumers," Maryland Attorney General Brian Frosh said in a statement.

In Sacramento, California, that state's top air quality regulator said her agency is preparing a series of actions against Volkswagen in response to the company's admission that it cheated on tailpipe pollution tests.

The state also intends to order a recall of Volkswagen diesel vehicles sold in the state with software that enabled the cars to pass the agency's emissions tests, but then emit far more pollution on the road.

Volkswagen has said 11 million cars globally had the software fitted, but it was not activated in the bulk of them. As well as the cost of regulatory fines and potentially refitting cars, Volkswagen faces criminal investigations and lawsuits from cheated customers and possibly shareholders.

European regulators say they will now perform random checks and road tests on cars to analyze their emissions data. The Volkswagen Jetta TDI and its diesel engine are among those affected by the rigging of emissions tests for about 500,000 diesel cars in the U.S. (Damian Dovarganes/Associated Press)

More immediately, the new CEO will have to restore the confidence of customers, who have expressed frustration at a lack of information about how they will be affected by the scandal.

Mueller has a majority on the 20-member supervisory board, the source said. Volkswagen declined to comment.

The board will also dismiss the head of the company's U.S. operations and top engineers at its Audi and Porsche brands, a senior source told Reuters, as it seeks a fresh start.

The company is under pressure to act decisively, with German Chancellor Angela Merkel urging it to quickly restore confidence in a business held up for generations as a paragon of German engineering prowess.

"There will be further personnel consequences in the next days," Volkswagen board member Olaf Lies told the Bavarian broadcasting network.

More dismissals

The research and development chiefs of Audi and Porsche, Ulrich Hackenberg and Wolfgang Hatz, will be removed by the supervisory board, as will Volkswagen's top executive in the U.S, Michael Horn, the senior source told Reuters.

Hackenberg and Hatz had both held senior posts at VW in development, including of engines, before they switched to Audi and Porsche. They are among Volkswagen's top engineers.

The scandal has sent shockwaves through the car market, with manufacturers fearing a drop in demand for diesel cars and tougher regulations and customers worrying about the performance and re-sale value of their cars.

The European Commission urged all member states to investigate the use of so-called defeat devices and said there would be "zero tolerance" of any wrongdoing.

So far, no other automaker has been found to have used the devices. German rival BMW said on Thursday it had not manipulated tests, after a magazine reported some of its diesel cars were found to exceed emissions standards.

Martin Winterkorn resigned as chief executive officer of Volkswagen Wednesday after revelations that 500,000 cars had been rigged to pass emissions tests, while emitting higher levels on the road. (Michele Tantussi/Bloomberg)

Though Winterkorn oversaw a doubling in sales and a near tripling in profit during his eight-year reign, he faced criticism for Volkswagen's underperformance in the U.S. and for a micro-management style that critics say delayed model launches and hampered its ability to adapt to local markets.

Analysts said a new management structure, possibly more decentralised but also with a clearer system of checks, was all the more urgent, with top executives apparently unaware of the emissions test cheating despite a tight control on decisions.

Two sources close to the matter said Volkswagen would create a special position for the United States on its management board on Friday, with the head of its Skoda brand, Winfried Vahland, the favourite to get the job.

The new CEO will also need to improve communications with dealers and customers, with many frustrated that Volkswagen has yet to say which models and construction years are affected by the crisis and whether cars will have to be refitted.

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