Volkswagen’s Chairman, Ferdinand Piëch, is ousted in power struggle – NYTimes.com

FRANKFURT — Ferdinand Piëch, the Porsche family scion who has dominated Volkswagen for more than two decades, will resign as chairman of the automaker’s supervisory board, the company said on Saturday, in what appeared to be a stunning defeat for a manager used to getting his way.Mr. Piëch, a 78-year-old Austrian, recently sought to force out Martin Winterkorn, a onetime protégé, as Volkswagen’s chief executive.

But the move backfired after Mr. Winterkorn refused to go and other members of the supervisory board rallied behind him.Volkswagen said in statement on Saturday that “the mutual trust necessary for successful cooperation no longer exists” on the supervisory board. As a result, Mr. Piëch will give up his post as chairman, effective immediately.

Ursula Piëch, his wife, will also give up her seat on the board, Volkswagen said.Berthold Huber, a labor leader who is deputy chairman of the supervisory board, will serve as acting chairman until a new chairman is chosen, Volkswagen said. In Germany, the supervisory board oversees the work of the management board, which is in charge of day-to-day operations.“Ferdinand Piëch has made an enormous contribution to Volkswagen and the entire automobile industry,” Mr. Huber said in a statement. “The developments of the last two weeks have, however, led to a loss of trust between the supervisory board chairman and the other members, which in recent days has proven to be impossible to resolve.”Mr. Piëch’s resignation came as a surprise. He had a long history of winning power struggles, and many people assumed he would win this one as well.

For example, when Porsche, the sports car maker, tried to take over Volkswagen in 2008, Mr. Piëch was eventually able to turn the tables and take over Porsche instead.Mr. Piëch initiated the most recent power struggle when he told the German magazine Der Spiegel this month that he was distancing himself from Mr. Winterkorn. The public undermining of a top manager was classic Piëch. In the past, when he criticized a Volkswagen executive publicly, it was a sure sign that the manager’s days were numbered.

This time, Mr. Piëch appears to have miscalculated. His unilateral attempt to undercut Mr. Winterkorn annoyed the labor representatives on the supervisory board, who hold half the seats, as well as representatives of the state of Lower Saxony, which owns a 20 percent stake. They lined up behind Mr. Winterkorn. Volkswagen is based in Wolfsburg in Lower Saxony.Stephan Weil, the prime minister of Lower Saxony, said Saturday of Mr. Piëch, “It is no exaggeration to say that he is one of the most important people in the history of German business.”

“Nevertheless, it was urgently necessary to end the speculation about persons and to ensure clarity in top management,” Mr. Weil said in a statement. “Volkswagen and its many thousand employees must be able to concentrate on business.”Though demanding, mercurial and often feared, Mr. Piëch is credited with rescuing Volkswagen from near bankruptcy after he took over as chief executive in 1993. The grandson of Porsche’s founder, Ferdinand Porsche, Mr. Piëch was an engineer both by training and by nature who viewed technical excellence as the key to success in the car industry.AdvertisementContinue reading the main storyContinue reading the main storyContinue reading the main storyAs a top executive at Volkswagen’s Audi division in the 1970s and 1980s, Mr. Piëch oversaw the development of all-wheel drive in cars, a feature still associated with Audi.

After he was appointed chief executive of the parent company, Mr. Piëch ensured that even mass-market cars like the Volkswagen Golf had driving characteristics normally found in more expensive cars.Under Mr. Piëch, who became chairman of the supervisory board in 2002, Volkswagen became much more than a producer of automobiles for the middle class. In Mr. Piech’s zeal to cover all segments of the market, the company acquired the Czech automaker Skoda to reach price-conscious buyers, while buying the Bentley, Lamborghini and Porsche brands to appeal to wealthy drivers.

The company also produces trucks under the Scania and MAN names and owns the motorcycle manufacturer Ducati. But the core Volkswagen brand has suffered from poor profitability. It has struggled to expand market share in the United States despite investing $1 billion to build a plant in Chattanooga, Tenn., where it manufactures Passat sedans and other cars.Mr. Piëch has faced criticism for his obsession with making Volkswagen the largest carmaker in the world rather than the most profitable. Now that he has left, there are sure to be questions about whether it makes sense for one company to be in so many market segments.

Volkswagen posted sales of 202.5 billion euros, or about $220 billion, and net profit of €10.8 billion in 2014. Its unit sales of 10.14 million vehicles put it second globally, behind Toyota Motors’ 10.23 million and ahead of General Motors’ 9.92 million.

Source: Volkswagen’s Chairman, Ferdinand Piëch, Is Ousted in Power Struggle – NYTimes.com

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