HAMBURG: Volkswagen is considering a possible change to its supervisory board that could lead to the replacement of Bernd Osterloh, its powerful works council head, sources familiar with the matter said on Thursday.

A move for Osterloh, if confirmed, could ease tensions that came to a head last year when he opposed a push by CEO Herbert Diess for a contract extension to drive his plans for cost cuts and to free up resources to invest more in electric vehicles.

One source said that Osterloh had been offered the position of personnel director at Traton, Volkswagen's truck unit that was spun off and separately listed in 2019.

A second source said VW was considering proposing a new labour representative to its board, but did not give a name.

Five sources said that the Wolfsburg-based carmaker would in the near future debate an important change in the composition of its supervisory board.

The company, its main shareholder Porsche SE and the works council all declined to comment.

Osterloh, 64, has since 2005 been a member of Volkswagen's supervisory board, half of which is composed of labour representatives under Germany's system of corporate governance.

Should he depart the VW supervisory board, as would be required should he take up an executive role at Traton, the most likely candidate to replace him would be deputy works council head Daniela Cavallo, the sources said.

Procedurally, it would be possible to nominate Cavallo to the supervisory board, subject to a confirmatory vote by shareholders at the annual meeting in July, the sources added.