Porsche executive Matthias Mueller is new Volkswagen CEO

Matthias Mueller, head of the Porsche sports-car brand, is to take over as Volkswagen's chief executive with the unenviable task of repairing the automaker's battered reputation.

Mueller, 62, had been widely tipped to succeed Martin Winterkorn, who quit on Wednesday after admitting the world's largest automaker had installed software designed to cheat emissions testing on its diesel vehicles.

Volkswagen's supervisory board choose Mueller on Friday, turning to an insider who has helped revitalize the Porsche brand.

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The company said it was suspending some employees, but did not name them.

It also announced it would reorganize its North American operations, combining U.S., Mexican and Canadian units under the leadership of Winfried Vahland, formerly chairman of the board of directors at Czech-based brand Skoda. Michael Horn will remain as president and CEO of Volkswagen Group of America.

Volkswagen admits the defeat devices were installed in 11 million vehicles worldwide, including an estimated 100,000 Volkswagen and Audi four-cylinder diesel cars of the model years 2009-2015 that were sold in Canada.

The software in the cars' engine-control computers could detect testing conditions and prompt the cars to remove nitrous oxide, a harmful emission created by burning diesel.

Volkswagen is facing the biggest test of its 78-year history, with both criminal fines and massive lawsuits on the horizon.

Shaken consumer confidence

It also will have to work hard to restore the faith of its customers, who feel betrayed by the scandal.

"I will personally do everything to win back the trust of our customers, our employees, our partners, investors and the whole public," Mueller said. "We stand by our responsibility. Occasionally, our and your patience will be tested, but ... carefulness is even more important than speed."

He pledged to make sure nothing like this scandal could happen again at Volkswagen, saying he would "introduce even tougher compliance and governance standards in the company."

The company has set aside 6.5 billion euros ($9.6 billion Cdn) to handle a recall it has yet to begin, but could face billions more in legal costs as regulators around the world step up their investigations of its products. 

That's even before the lawsuits, in which consumers could argue their cars have been rendered worthless by VW's deceptions as they will lose their resale value, even after they are repaired. There also is potential for lawsuits over the damage its products may have done to the environment.

Mueller trained as a toolmaker before studying information technology, and has worked for parts of the VW empire since the 1970s. He is believed to have the confidence of the Porsche-Piech family who control voting rights at the company.

Mueller made his name as product manager for Audi's successful A3 model in the 1990s and then worked as VW's head product strategist until 2010 when he was asked to lead Porsche.

He is credited with expanding Porsche and expects to increase sales to 200,000 vehicles this year.

Volkswagen stock is down 34 per cent since last Friday when news of the emissions failures first emerged and declined four per cent today.