VW power struggle as chairman locks horns with CEO

VW board battle

Ferdinand Piëch has notoriously ended the tenure of VW Group execs with a pith comment to the media; now he’s at odds with his expected successor, VW CEO Martin Winterkorn

IS Sauron finally losing his grip on Mordor? Ferdinand Piëch, easily the most frightening man in the global car industry, is used to effectively dismissing the most senior executives in the Volkswagen empire with a pithy quote for the press that makes their position untenable. Piëch has just tried to give Martin Winterkorn, CEO of the entire Volkswagen Group, this treatment. Winterkorn's contract is up next year, but he had been expected to get an extension, then replace Piëch as Chairman of the Supervisory Board when that term expires in 2017. But Piëch told German news magazine Der Spiegel that he is now 'at a distance' to his former protégé.

Once, those words would have killed a man’s career. But Winterkorn is refusing to follow the script and slink off. Asked about his future following Piëch's apparent Nero-style thumbs-down, Winterkorn responded, 'there is one'. And Piëch is being reminded that Volkswagen is not his personal fiefdom by the other members of the board. "The statement from Dr. Piëch portrays his private opinion, which is not aligned with that of the family," said his cousin Wolfgang Porsche, who speaks for the Porsche-Piëch clan which owns 51 per cent of the Volkswagen Group. The state of Lower Saxony, which controls 20 per cent of the stock, and the VW labour council which holds half the seats on the supervisory board have both also openly defended Winterkorn.


So this may come down to a battle of wills between Piëch and, well, everyone else. Even with those odds, don't bet against Piëch. He has a dagger collection and studies the tactics of the Japanese in World War II. He ended Franz-Josef Paefgen's tenure at Audi in 2001 by telling journalists that 'gridlock reigns there'. Winterkorn's predecessor Bernd Pischetsrieder got the same treatment: Piëch said that his contract renewal was 'an open issue', then suddenly it wasn't an issue at all. Piëch got rid of Porsche boss Wendelin Wiedeking in 2009, despite the fact that he had massively enriched the Porsche-Piëch clan. Wiedeking offended Piëch by wielding too much power. That's Piëch 's job, so he had to go. When Wiedeking's plan for Porsche to buy out VW faltered in the credit crunch, Piëch won.

Piëch has legitimate beef with Winterkorn, despite the fact that since the latter became CEO in 2007, group sales have surged from 6 to 10 million. VW is likely to overtake Toyota to become the world’s biggest carmaker this year, three years ahead of the target Winterkorn set. But VW's operations in the US are a disaster, it has failed to develop a new low-cost brand for emerging markets, and Piëch thinks Winterkorn hasn't thought big enough about how to counter the challenge from Tesla, Google and Apple. The VW brand itself isn't profitable enough, and in an early sign of Piëch's disfavour, Winterkorn was relieved of direct responsibility for it in December.

However this plays out, Porsche CEO Matthias Müller remains the front-runner to succeed Winterkorn. But he may replace a promoted Winterkorn, not a sacked one. Piëch was a brilliant engineer and is an even better power-broker, but his autocratic style ­– including appointing his current wife, a former nanny, to the VW board - has long grated on his fellow board members and shareholders. With Piëch aged 77 and two years from the end of his term, they might finally be about to take a stand against him. VW insiders say the open row will now go into a quieter ‘diplomacy phase’. But there's a chance that this time, a few choice words from Piëch will result in his own departure.

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