Over the past few weeks, Volkswagen Group CEO Herbert Diess has been locked in a standoff with the carmaker’s powerful works council.

As late as Friday, things appeared to be settled in the union’s favor and Diess’s days as CEO of Europe’s biggest automaker were numbered. However, the dispute seems to have been resolved, Reuters reports.

After prolonged negotiations led by Volkswagen supervisory board Chairman Hans Dieter Pötsch, the two sides reportedly reached a solution that will allow Herbert Diess to keep his job, two sources close to the matter told the news agency.

"It is going in the direction that the dispute will be settled, and Diess will remain CEO,” one of the sources said. The compromise will see Diess focus on strategy while VW brand chief Ralf Brandstätter will become a member of the management board. 

VW Passenger Cars CEO Ralf Brandstätter and the VW ID. Life Concept
VW Passenger Cars CEO Ralf Brandstätter and the VW ID. Life Concept

This seems to align with German media reports from last month that said Brandstätter would take over responsibility for the group’s mass-market brands from Diess. VW’s mass-market brand group includes the VW, Skoda and SEAT marques.

It is not the first time Diess is forced to cede responsibility in favor of Ralf Brandstätter after relinquishing the helm of the VW brand last year.

German press reports on Monday claim that Herbert Diess is backed by the Porsche-Piëch family, VW Group’s majority stakeholder, against union pressure to sack him. Labor representatives have a powerful say in the way the company is run, though, holding half the seats on Volkswagen AG’s board.

Herbert Diess has come under fire ever since he mentioned the risk of 30,000 job cuts in September. He reportedly told VW’s supervisory board that the carmaker’s home plant in Wolfsburg, Germany, needed to become more efficient and transition to EVs more quickly to compete with emerging automakers such as Tesla.

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