VW boss Martin Winterkorn defeats chairman Ferdinand Piech
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Version 0 of 1. The chief executive of Volkswagen, Germany’s highest paid boss, has chalked up a major victory against the company’s chairman and his erstwhile friend after getting the backing of directors in a power struggle that has held the country’s corporate world enthralled. The decision of VW’s steering committee to endorse Martin Winterkorn as the “best possible CEO of Volkswagen”, whose contract would be extended next year, was a rare defeat for long-standing chairman Ferdinand Piech, the patriarch of the founding family who had sought to oust the 67-year-old from his post. It came just a week after the row hit headlines when Piech delivered the stinging remark that he was “at a distance to Winterkorn,” a statement made to journalists which many said drove the final nail into the coffin for the CEO. Piech, 78 on Friday, is expected to step down at the annual shareholders meeting in 2017 and appeared to have wanted to trigger a leadership change before his departure, but he spectacularly failed to secure the backing of the rest of the boardroom. But whether the committee’s statement that it was fully behind Winterkorn will now end a feud that has been compared both to Wagner’s Götterdämmerung (Twilight of the Gods) and HBO’s Game of Thrones, is yet to be seen. Many question whether Winterkorn and Piech can continue to work together in such a poisonous atmosphere at Germany’s largest car manufacturer, as it undertakes huge structural changes in a battle to increase profitability and reverse falling sales in the US, Brazil and elsewhere. The two men will need to show a united front on 5 May when they are expected to share the podium at VW’s annual shareholders’ meeting in Hanover. In the past, a throwaway comment from Piech, the grandson of the VW Beetle creator Ferdinand Porsche, has been enough to bury the fortunes of many a senior VW executive. So there were widespread predictions that the demise of Winterkorn, who has led VW since 2007, was nigh. But, following a crisis meeting in Salzburg on Thursday to which executives were flown in on Falcon jets, Piech found himself lacking sufficient votes after the VW works council and the local state government of Lower Saxony, both of them key stakeholders, distanced themselves from Piech to back Winterkorn. Also in the chief executive’s camp were Piech’s cousin, Wolfgang Porsche – whose Porsche SE holding company holds a 50.7% stake. Earlier in the week Porsche had said Piech’s statements “represent his personal opinion (and) their content and substance was not agreed with the family”. Instead, Piech, a talented automative engineer and a skillful – some would say Machiavellian – operator, is the one who has found himself isolated. Winterkorn, who last year earned €15.9m (£11.5m) in annual pay and benefits, has received accolades for almost doubling sales to more than €200bn – almost equivalent to the entire economic output of Portugal – putting it on course soon to overtake Toyota as the world’s largest carmaker. Detractors say the success comes mainly from the strength of the Porsche and Audi brands, (both of which come under the VW marque) as well as VW’s strong position in China, which covers up many flaws at VW, including low productivity compared to competitors and a failure to produce models that the US market wants. It is also behind on car industry developments such as electric cars, where it has been superseded by companies such as Tesla in California and, closer to home, its Munich competitor BMW. While Google and Apple are experimenting with driverless cars, VW has so far shown little initiative in that direction. Industry observers have been flummoxed by the timing of the leadership battle. “Since Piech brought Winterkorn into the top tier of the company eight years ago, the two engineers have worked on realising their big dream – of turning VW into the largest carmaker in the world,” according to Caspar Busse in the Süddeutsche Zeitung. “And at the very moment when they’re on the verge of realising their goal, we get this unprecedented power battle.” The true cause, he said, was “megalomania”. Both have set their sights on making the Wolfsburg-based company the biggest in the world “to the expense of everything else and the result is a company with 12 brands that has become so big and complex that it is almost ungovernable.” Long gone are the days when Piech and Winterkorn got on so well that the two had so deep a mutual understanding, according to Piech, that they did not need to speak to each other. Some observers say that at the heart of the row is Piech’s concern that Winterkorn is now so closely associated with the VW brand that his own legacy is at stake. Even if they solve their battles, the question as to who will take over the reins from Piech when he retires, remains open. Industry observers say he would like his successor to be Ursula his wife, who famously takes pride in test driving the new models herself. But it is said the Porsche family favours Winterkorn. “For them he is the desired candidate to take over from Piech as chairman,” said Dietmar Hawranek of Der Spiegel magazine. “But the Porsches can’t shoehorn Winterkorn in against the will of the Piechs, and Piech can’t install his wife without the approval of the Porsches.” The next VW battle might well be looming. A brief history of Volkswagen Founded on May 28 1937, in Wolfsburg, Germany, by the Deutsche Arbeitsfront (German Labour Front), Volkswagen – translated as the People’s Car – was an attempt to create a model that the average German could afford at a time when the market was dominated by luxury models. The city of Wolfsburg was especially created for the VW plant workers tasked with mass producing the Volksauto, a small-engined, beetle-shaped car designed for the ordinary family by Ferdinand Porsche in 1931, and seized on by Adolf Hitler when he came to power in 1933 as an opportunity to keep the people happy. But Hitler’s plans came to nothing when the onset of war meant the factory had to switch to armaments. After the war, the Allies took control of the Wolfsburg plant and under the supervision of British Army Major Ivan Hirst, mass production of the Beetle began. By 1955, a million of the cars had been sold, with sales remaining high into the 60s and 70s. In 1972, it surpassed the Ford Model T as the best-selling car in the world. VW bought the Audi/Auto Union in the 60s, which led in 1974 to the first Golf – a best-seller. The Polo followed in 1976. In the 80s VW took over Spanish carmaker Seat, and and a controlling stake in the Czechoslovakian Skoda, which it bought out in the 90s. From this time on under Ferdinand Piech, the trophy brands Bentley, Lamborghini and Bugatti were bought. In 2009 VW acquired Porsche. It also owns motorbike manufacturer Ducati and heavy vehicle manufacturers Scania and MAN. Volkswagen is now the biggest carmaker in Europe and the second biggest in the world after Toyota. It employs 600,000 people in 118 factories around the globe, selling more than 10m vehicles last year. |