Volkswagen Group appears to be setting its truck and bus unit for a flotation, billing a restructuring as paving "the way for capital market readiness".

The announcement came ahead of a supervisory board meeting which confirmed a major management and structural shake-up at the entire VW Group with chairman Matthias Mueller, a company lifer, ousted in favour of former BMW executive Herbert Diess.

Volkswagen Truck & Bus was formed three years ago and the company said the restructure is "an important step to prepare the company for its capital market readiness. Capital market readiness opens up a wide range of opportunities for the group's sustainable further development on its way to becoming a global champion".

CEO Andreas Renschler said: "Creating Volkswagen Truck & Bus in 2015 was exactly the right decision: today, our commercial vehicle brands are working more closely and successfully together than ever before. Paving the way for capital market readiness is the next logical step in the successful development of our company. We are now ready to gear up through the achievement of capital market readiness. Obviously, this is something that cannot be done overnight. We have therefore launched 'Next Level',a comprehensive project that has brought together nearly 200 employees who work for all of our brands and in all parts of the world. As a team, we will fulfill the requirements necessary to tap additional financing opportunities offered by the capital market. In doing so, we can flexibly accelerate the profitable growth of our commercial vehicles business. Our customers, employees and the entire Volkswagen Group will benefit equally from this step."

VW AG's supervisory board has approved the change of the legal structure so the GmbH company initially is to be converted into an Aktiengesellschaft (AG) and as a second step into a Societas Europaea (SE). However, the latter still requires further approval from the supervisory board. These steps are to be carried out as soon as possible.

The group has 31 locations in 17 countries and 81,000 employees who produce trucks and buses. In its first financial years 2016 and 2017, the company spent EUR2.9bn on research & development. Truck & Bus claims "leading market position" in Europe and Brazil and has partnerships in North America America and China.

Next Level focuses on seven initiatives:

•  Brand performance: further enhancement of brands' performance with individual identities, strengths and profiles

•  Global expansion: further global expansion to leverage scale and be ahead of competition

•  Future business models: develop solutions for future transportation (in such areas as autonomous driving and e-mobility)

•  Cooperation & synergies: increase cooperation and leverage synergies between brands

•  Optimisation of the organisational structure: reassessment of the structure and further development of joint values

•  Communications: pursue an active and open communications approach

•  Achievement of capital market readiness: meet technical and structural requirements of the capital market

"Since 2011, the employee representatives of Volkswagen, MAN and Scania have been supporting the strategy that our truck division requires global presence to maximise synergies," said Bernd Osterloh, chairman of the VW group works council.  "With capital market readiness we are paving the way to sustain growth – if necessary – financially and thus open up new perspectives for our strong brands MAN and Scania and secure jobs in the long term.

He said the council intends to "engage closely" in the company's further transformation from a GmbH into an AG.

"What we see at the end of the process is a Societas Europaea (SE). We attach great importance to that, because we want strong co-determination for our colleagues at MAN and Scania. And the SE is the only way to ensure that this is the case," Osterloh added.

The grouping also includes Brazil's Volkswagen Caminhoes e Onibus. Since formation in 2015, key structures and positions in the organisation were put into place. Collaboration among the brands has improved while first synergies were realised. As part of this effort, Volkswagen Truck & Bus has significantly intensified collaboration between the brands by introducing Lead Engineering which saves time and costs. Via Lead Buying, the brands are also jointly addressing commercial levers through volume bundling and joint purchasing strategies for a total of some 40 components. Furthermore, the group's modularisation management reduces complexity and enables commercial scale effects.

In autumn 2016, Volkswagen Truck & Bus introduced the cloud-based RIO platform and now claims to market leader in Europe for connected trucks.

Through its strategic alliance with Navistar, the company also gained access to the important North American market. And the most recent strategic partnership with Hino Motors further expands the group's presence in Asia and Japan.

In its second operational year (2017), Volkswagen Truck & Bus achieved sales of 205,000 commercial vehicles, an increase of 11.6% over 2016. Group revenues went up 12.1% to EUR23.9bn mainly due to a strong increase of unit sales throughout the group. Operating profit before special items increased by 26.8% to EUR1.7bn, corresponding to an operating return on sales of 6.9%.

See also: Volkswagen and Hino agree strategic partnership on CVs

Herbert Diess replaces Mueller as VW Group chief