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Porsche offices raided

Matthias Mueller has been replaced by Herbert Diess as Volkswagen’s new CEO.

Police raided ten locations connected to three current and former Porsche employees on Wednesday, reports German newspaper, The Local. They are all connected to the German government’s ongoing investigation into auto manufacturers cheating on diesel emissions tests.

Prosecutors and 160 police officers were involved.

“The three accused consist of one member of Porsche’s executive board and one senior manager. The third accused no longer works for Porsche,” prosecutors told The Local.

While Audi and parent company Volkswagen has clearly been raided before, Porsche has not been targeted in such raids until now. 

The Local suspects that the executive board member who prosecutors referred to may be outgoing VW CEO Matthias Mueller, who was the head of Porsche from 2010 to 2015 before replacing Martin Winterkorn at Volkswagen just after the company admitted to cheating on diesel emission tests. 

Though his aim was to lead VW out of the scandal, Mueller himself soon came under investigation for allegedly failing to disclose information about the scandal quickly enough to shareholders. 

Mueller was himself replaced by Herbert Diess.

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VW announces Herbert Diess as new CEO

Volkswagen has chosen Herbert Diess as its new chief executive in an overhaul that includes streamlining the company’s multiple car brands into just three groups while preparing its truck business for a potential listing.

Matthias Mueller’s replacement with VW brand chief Diess follows slow progress in reorganising the group’s car brands, a key pillar of “Strategy 2025” to transform the Germany’s biggest car company into a leader in cleaner cars and to move on from its diesel emissions scandal of 2015.

For Volkswagen its the biggest development since it became a multi-brand conglomerate under former chief executive Ferdinand Piech.

The carmaker said it planned to create six new business areas and a special portfolio for China, its largest market, and split its brands into three new vehicle groups with categories for value, premium and super-premium nameplates.

The “super premium” group would include sports car brands Porsche, Bentley, Lamborghini and Bugatti. Audi would be excluded from this group and form its own premium division.

Analysts welcomed the appointment of Diess, a former BMW executive who has more than doubled profitability at the VW brand since taking charge in 2015.

“Diess is a man of action, he is the most plausible choice at VW to lead the group into the next phase of its transformation,” said Nord LB analyst Frank Schwope, who has a “buy” rating on Volkswagen.

Separately, VW said works council executive Gunnar Kilian, a close aide to labor boss Bernd Osterloh, will replace group human resources chief Karlheinz Blessing who will stay at VW as an adviser. 

VW will tighten leadership duties within the group and empower the heads of the three vehicle categories to take on company-wide responsibilities.

With VW’s core namesake brand shouldering the bulk of development spending within the group, Diess will also become responsible for R&D activities across the group. Rupert Stadler, CEO of luxury division Audi will take charge of group sales.

Oliver Blume, head of sports car brand Porsche and newly appointed to the group executive board, will oversee production at the multi-brand organisation, VW said.

Diess, Stadler and Blume will also take charge of the new groups Volume, Premium and Super Premium respectively, VW said, without giving more details.

Analysts at Goldman Sachs say there is 160 billion euros worth of “hidden value” in the European autos sector that could be unlocked through portfolio simplifications.

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EU to give more power to consumers

European Commission

The European Union have announced a proposal to give more powers to consumers to sue firms such as the Volkswagen Group after the diesel-emissions scandal showed the limits of consumer protection.

Wednesday’s proposal would allow some affected groups to launch collective action and consumer protection authorities higher sanctions for rule breakers.

“Consumer authorities will finally get teeth to punish the cheaters,” Europe’s Justice Commissioner, Vera Jourova, said to Automotive News. “It cannot be cheap to cheat.”

EU regulators say that, after VW was caught using software to cheat emissions test by U.S. authorities, they lacked the tools to ensure EU car owners received the same kind of compensation offered to US clients.

Jourova said only two national consumer protection authorities imposed fines on VW, amounting to 5.5 million euros.

“This is nothing in comparison to what Volkswagen paid in the United States,” she said.

The European Consumer Organisation (BEUC) said the move was long overdue but cautioned that judges and national authorities would still hold sway over what may be a laboriously lengthy process.

Business groups said the plan, which still need approval from national governments and the European Parliament, could lead to a proliferation of lawsuits, saying EU citizens already enjoy some of the world’s strongest consumer protection rules.

Defending the draft rules, Jourova said they would not allow US-style, profit-seeking class action suits. 

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BMW searched by Police

BMW’s corporate headquarters in Munich, Germany

BMW premises in Germany and Austria have been searched by German state prosectors, investigating defect devices capable of manipulating exhaust emissions.

Around 100 law enforcement officials searched the automaker’s Munich headquarters along with research facilities and a factory in Austria.

Prosecutors said they had opened an investigation last month against unknown persons for suspected fraud.

“There is an early suspicion that BMW has used a test bench-related defeat device,” prosecutors said in a statement.

BMW have long denied its cars are equipped with software designed to manipulate emissions tests, BMW said the findings did not reveal a “targeted manipulation” of emissions cleaning.

The automaker said prosecutors were looking into “erroneously allocated” software in about 11,400 vehicles of the BMW 750d and BMW M550d models.

BMW last month recalled 11,700 cars to fix engine management software, saying it discovered that the wrong programming had been installed.

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