It's a fairly common practice for newer companies and startups to adopt a less traditional structure in their workforce, with less emphasis on heirarchy and more emphasis on flexibility of operations. Anyone working in a fairly serious corporate position will understand the difficulty of getting approvals from up the chain, and when you take away the red tape it's possible to test and develop at a much quicker rate.
Agile development methodology has its advantages and drawbacks, but Volkswagen feels that their company would benefit from this shift in structure. Naturally not every department can benefit from this, especially smaller ones, but in areas where development needs to be sped up they have chosen to create smaller groups that report to an individual manager which will set their targets and goals, making them function more effectively. There's also more equality in terms of opinion of each member, which can lead to unique solutions.
But they aren't the first company to adopt this. Honda has had something similar for a long time, where they have meetings in which everybody can speak their mind. Perhaps they may not have adopted agile methods on the whole, but there were elements of it in their corporate structure that helped a great deal with the way they solved issues. It was especially important to have such a system when the pressure from Soichiro Honda himself was so strong that people worked in fear of repercussions for speaking up.
What this also means is that there is less of a risk of another dieselgate issue. Smaller groups allow for better management and check and balance, rather than engineers having to operate as individuals in a very large group. With funds and time being short, Volkswagen has been forced to put a lot of new model development on hold as they sort out their current issues, and this shift in structure may lead to a shortened timeline from development to production for newer products. After all, Honda has had a number of products that have gone from drawing board to full model in just 2 years.
One of the more obvious applications for this restructuring is in the IT department, where they've now began pairing employees off and assigning content to each pair which helps with both training and speeds up the development of particular content. In the future, Volkswagen is also considering applying the pairing system to outsourced employees- i.e. having one employee in Germany paired with one in India. The dissolution of the traditional corporate structure may be frowned upon by the older generation, but its results are hard to argue with (when executed correctly).