The car group's net profit plunged to DM147m ( pounds 63m) in 1992 from DM1.1bn the previous year and the dividend was slashed from DM11 to DM2.
Mr Lopez was finally lured from GM only after a furious tug-of- war between the auto giants at the weekend.
The 52-year-old Spaniard, who comes with a daunting reputation for cost-cutting, will head a new section concentrating on optimising production and also purchasing. He symbolises the uncompromising breed of manager that Volkswagen's chairman, Ferdinand Piech, wants at his side to restore VW to competitiveness.
Dieter Ullsperger, the company's finance director, has been removed because of 'differing opinions over future business policy', the group said. He will be replaced by Werner Schmidt, another board member, who was the head of sales.
Gunter Hartwich, responsible for production and logistics, was another victim. The research and development board member Ulrich Seiffert will also leave the group's management board, although he will remain head of research and development of the company's Volkswagen-branded products.
The extent of the misery at Europe's leading car manufacturer was highlighted by the slump in profits last year, despite the fact that group sales rose to DM85.4bn from DM76.3bn in 1991.
Insiders talk of operating losses of DM1bn in the first quarter of the current year. Mr Piech has slashed investment spending and will cut 12,500 jobs in Germany by the end of next year.Reuse content