Volkswagen has chosen Herbert Diess as its new chief executive in an overhaul that includes streamlining the company's multiple car brands into just three groups while preparing its truck business for a potential listing. 

The plans were announced after Volkswagen board of directors ousted Matthias Mueller as CEO.

They also discussed ways to overhaul the company, which spans motorbikes, buses, trucks and passenger car brands including Ducati, Bentley, Porsche, Audi, Scania and Skoda. 

Mueller's replacement with VW brand chief Diess follows slow progress in reorganising the group's car brands.

This is a key pillar of "Strategy 2025" to transform the Germany's biggest car company into a leader in cleaner cars and to move on from its diesel emissions scandal of 2015. 

For Volkswagen, it is the biggest overhaul since it became a multi-brand conglomerate under former chief executive Ferdinand Piech, a grandson of VW Beetle designer Ferdinand Porsche. 

Under the plans,Volkswagen will divide itself into six new business areas, plus a portfolio for China, as part of an effort to decentralise responsibility and improve efficiency. 

The carmaker will prepare its truck and bus division for "capital market readiness" by making it a public limited company as a prelude to a potential listing, confirming a Reuters report from last month. 

The new car brands will be Volume, Premium and Super Premium. 

Analysts welcomed the appointment of Diess, a former BMW executive who has more than doubled profitability at the VW brand since taking charge in 2015.

VW said it will tighten leadership duties within the group and empower the heads of the three vehicle categories to take on company-wide responsibilities. 

With VW's core namesake brand shouldering the bulk of development spending within the group, Diess will also become responsible for R&D activites across the group. 

Rupert Stadler, CEO of luxury division Audi, will take charge of group sales. 

Oliver Blume, head of sports car brand Porsche and newly appointed to the group executive board, will oversee production at the multi-brand organisation, VW said, confirming a Reuters report.

Diess, Stadler and Blume will also take charge of the new groups Volume, Premium and Super Premium respectively, VW said, without giving more details. 

The German carmaker's deliberations come as rival carmakers and suppliers including Fiat and Daimler work on ways to slim down and divest non-core assets. 

Analysts at Goldman Sachs say there is €160 billion worth of "hidden value" in the European car sector that could be unlocked through portfolio simplifications.