Volkswagen Group boss Matthias Müller is being sensationally ousted by the company's supervisory board and replaced with Herbert Diess, who runs the Volkswagen auto brand.
"The Volkswagen Group's goal is and remains to align the Company and its brands with future needs, to safeguard its position among the leaders of the worldwide automotive industry with innovativeness and profitability, and to be instrumental in shaping tomorrow's personal mobility with the strength of our Group brands", said Chairman of the Supervisory Board, Hans Dieter Pötsch.
Under new plans also announced today, the carmaker said it will create six new vehicle divisions. Volkswagen has set up a services company, Moia, and plants to turn out more battery-powered models.
Volkswagen shares were up 2.5 percent ahead of the board meeting due to start at 1400 GMT on Thursday at the carmaker's Wolfsburg base, and were one of the top gainers on the German blue-chip DAX.
The new vehicle brands will be Volume, Premium and Super Premium.
Volkswagen is keen to make efforts to put the Dieselgate scandal behind it - new CEO Diess wasn't at the company when the emissions transgressions took place - and a proposed radical shift to an ambitious electric strategy hasn't quite done the business for the company in the last three years.
Human resources head Karlheinz Blessing is being replaced by Gunnar Kilian, until now an official with the company's works council, or employee representatives.
"The way in which changes of such a magnitude were communicated internally is more than questionable", a source close to VW's supervisory board said.
However Ingo Speich, a fund manager at Union Investment which holds about 0.6 percent of Volkswagen preference shares, anxious that running a group with around 640,000 employees at over 120 plants worldwide could prove tough for Diess, who has a reputation for micro-management.