Volkswagen sets first quarter delivery record, Herbert Diess tipped as new CEO

Its profit margin climbed to 7.4 percent of sales a year ago from 6 percent in 2015, when the crisis hit. Chancellor Angela Merkel condemned the research, the German Parliament debated possible consequences, and animal rights activists demonstrated outside Volkswagen's headquarters in Wolfsburg.

Mueller's likely departure comes two days after Deutsche Bank DBKGn.DE , another pillar of corporate Germany, dismissed its chief executive, John Cryan, in pursuit of a more rapid turnaround following years of losses. At the same time, he presided over a management board still dominated by people who, like himself, were products of that culture.

The supervisory board will meet Friday to sign off on the management changes, the people said.

News of replacing Mueller moved shares upward.

Volkswagen CEO Matthias Mueller makes a statement, following a meeting ahead of deadline to inform US regulators on plans to comply with standards, at the VW factory in Wolfsburg, Germany November 20, 2015. The company sold a record 10.74 million vehicles, making it the world's largest carmaker, though the title is disputed by the Renault-Nissan-Mitsubishi alliance, which sold 10.6 million and says Volkswagen is counting trucks that aren't cars.

At the time of his appointment, Volkswagen said Diess was "the ideal candidate" to revive the VW brand, which lagged rivals Toyota (7203.T), Renault-Nissan (RENA.PA) (7201.T), General Motors (GM.N) and Ford (F.N) on profitability.

On the basis of these considerations, the Chairman of the Supervisory Board of Volkswagen Aktiengesellschaft is now in discussions with certain members of the Supervisory Board and of the Board of Management.

The German business publication believes Mueller's ouster is being engineered by the company's major shareholders, including the Porsche and Piech families, the German state of Lower Saxony, and Qatar, who are all keen for a reboot after the Dieselgate affair.

While Mueller is a life-long VW veteran, at times he cut an uneasy figure in the top job, which required him to manage the often contradictory demands of angry vehicle owners, disgruntled investors, well organized workers, and state officials with their own political agendas.

On Wednesday four sources close to the company told Reuters that the supervisory board would seek to bring works council executive Gunnar Kilian onto the company's management board to try to secure backing for Diess and his plans.

The potential restructuring was first reported by German magazine Der Spiegel.

Bloomberg's Eyk Henning contributed.

  • Eleanor Harrison