Ferdinand Piech, pictured on Thursday, May 10, 2007.CHRISTOF STACHE/The Associated Press
Ferdinand Piech, a grandson of the creator of the VW Beetle and patriarch of the German automaker for more than two decades, is losing his grip on Volkswagen AG two years before his last term as chairman ends.
Piech, 77, has found himself increasingly isolated after his hostile comments toward Chief Executive Officer Martin Winterkorn were quickly blunted by other power players at the Wolfsburg, Germany-based company. The rebuttal may mark the beginning of the end of an era at Europe's biggest carmaker.
Volkswagen's powerful works council, the state of Lower Saxony and even Piech's cousin Wolfgang Porsche rallied to the CEO's side after Piech escalated the power struggle by telling Der Spiegel in an interview published Friday that he was keeping himself "at a distance" from Winterkorn, whom he doesn't want as chairman.
"This uncertainty is a negative," Daniel Schwarz, a Frankfurt-based analyst at Commerzbank AG, said in a note. "Winterkorn's position certainly is weaker now," even if Piech can't muster the board votes to fire him.
Volkswagen shares fell as much as 2.5 per cent to 247 euros and were down 1.2 per cent at 12:38 p.m. in Frankfurt. The stock has more than doubled under Winterkorn's tenure, valuing the carmaker at €116-billion ($123-billion).
The Volkswagen chairman and former CEO had previously held almost undisputed sway. In 2006, Piech orchestrated the ouster of his hand-picked successor Bernd Pischetsrieder by criticizing him in a newspaper interview, and three years later he sided with the opposition to Porsche chief Wendelin Wiedeking's effort to take over VW, helping to turn the tables on the deal.
Unlike Piech's previous targets Pischetsrieder and Wiedeking, Winterkorn is in a position of strength. One of Piech's closest confidants for decades, he has brought VW to the cusp of snatching the global sales crown from Toyota Motor Corp. And as other supervisory board members have stepped forward to defend the CEO, Piech looks to be facing a lone battle.
In addition to Piech's comments, Spiegel reported that Piech's brother, supervisory board member Hans-Michel Piech, had faulted the CEO for his failure to introduce a low-cost car and master the U.S. market.
"Piech's criticism raises the question about his real motives," said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. "VW as a company has been very successful in recent years. That's in part because Winterkorn and Piech provided strong leadership at the top."
Wolfgang Porsche, chairman of Porsche SE, which owns the majority of Volkswagen's common stock, described his cousin's comments as a "private opinion" that wasn't coordinated with the rest of the family.
The Porsches have two seats on the 20-person board, while the Piechs have three. Works council chief Bernd Osterloh and the state of Lower Saxony, where VW is based, also expressed their support. The state has two seats, and worker representatives, who usually vote as a bloc, hold 10 seats.
Taken together, the board backers who emerged for Winterkorn over the weekend would have a 14-seat majority and could easily prevent Piech from trying to remove the CEO.
While Winterkorn has struggled in the U.S. and with integrating heavy-truck units MAN SE and Scania AB, he faces fewer deep-seated problems than either Pischetsrieder, who struggled to contain losses at the namesake VW brand, or Wiedeking, who was squeezed by ballooning debt at Porsche's holding firm.
The VW CEO clearly still has his hands on the wheel. He approved plans for a mid-size sport-utility vehicle for the U.S. and China last year and also pledged to lift earnings by €5-billion at VW's namesake brand by 2017. Driven by the Audi premium brand and Porsche sports-car marque, the VW group has said it plans for sales and profit to exceed 2014's records this year.
It was Piech himself who hired Winterkorn at Audi in 1981 as assistant to the member of the board for quality assurance.
Both men eventually led Audi, Piech from 1988 until he succeeded Carl Hahn as CEO of parent VW in 1993, and Winterkorn from 2002 to 2006. And the two executives will have to work together in coming days as they prepare for Volkswagen's annual shareholders meeting on May 5.
Piech himself said that he'd muscled his way to the top, describing in his autobiography how he fired numerous executives who didn't fit into his strategy. His habit of pausing for seconds before answering a question has contributed to his aura as mysterious patriarch acting behind the scenes through a far– reaching network across VW's stable of 12 automotive brands.
The smooth transfer of leadership to Winterkorn that many expected in 2017 now seems unlikely. Joerg Astalosch, a representative at Piech's office in Salzburg, Austria, declined to comment on the chairman's plans.
Still, Piech has proven to be a tenacious opponent, and he's already made sure his influence will remain on VW's board after his departure. His wife Ursula Piech was elected to a seat in 2012.
"Uncertainty is bad news for shareholders in VW," said Arndt Ellinghorst, an analyst with Evercore ISI in London. However, "a more concrete change in leadership could be viewed as an opportunity for VW to address its shortcomings."