VW chairman Piëch hoist by his own petard

Group chairman resigns after losing boardroom battle with chief executive Martin Winterkorn

Ferdinand Piech: was left with little option but to put his own head in the noose he had fashioned. Photograph: Frank Leonhardt

Ferdinand Piech: was left with little option but to put his own head in the noose he had fashioned. Photograph: Frank Leonhardt

 

After two decades as Volkswagen’s uncrowned and mercurial emperor, Ferdinand Piëch has resigned as group chairman after losing a boardroom battle with chief executive Martin Winterkorn.

At the weekend, news of Mr Piëch’s departure had an end-of-empire ring to it in Wolfsburg, home of the car giant founded in 1937.

Under his reign Volkswagen was transformed into a global giant with 600,000 employees. Mr Piëch (78) is the grandson of Ferdinand Porsche, founder of the eponymous luxury car company who scored his first success as designer of the car that would make Volkswagen world famous: the Beetle.

With his cousin Wolfgang Porsche, the Austrian-born Mr Piëch controls 51 per cent of the voting stock through a family investment company. But family loyalty could not prevent Mr Piëch being ousted after he isolated himself on the supervisory board.

Tensions

What had previously served as the kiss of death for a VW chief executive blew up in Mr Piëch’s face when the board refused to follow his vote of no confidence. That left him with little option but to put his own head in the noose he had fashioned.

Volkswagen announced on Saturday that Mr Piëch had tendered his resignation after the executive committee concluded “the mutual trust that is needed for successful co-operation no longer exists”.

Board members from VW’s powerful unions and the state of Lower Saxony, a 20 per cent shareholder made clear they backed Mr Winterkorn over Mr Piëch.

The rebels wasted no time in delivering fulsome if barbed tributes to the man they had just shafted. Lower Saxon state premier Stephan Weil said Mr Piëch was “without question . . . one of the most important people in the history of German business”.

“But it is nevertheless urgently necessary to end the speculation about persons and to ensure clarity in top management,” he added.

“Volkswagen and its many thousand employees must be able to concentrate on business.”

Berthold Huber, a former head of the IG Metall trade union, will assume Mr Piëch’s duties until a new chairman is elected, likely at the next annual shareholder meeting on May 5th.

Mr Piëch will remain on the board of the family holding company, though Mr Porsche is likely to emerge as frontman of the family-owned consortium, Porsche SE. In a statement, it expressed regret for the recent events and expressed “complete confidence” in Volkswagen’s management. Porsche SE would, the statement continued, show “great loyalty” as Volkswagen’s main shareholder.

After years at Audi, Mr Piëch rose to prominence at Volkswagen in 1993 when the company was facing bankruptcy. He began a ruthless modernisation drive at VW and acquired new brands in all segments. Today the company has nine brands, from the lower-end Skoda to high-end Bentley and Lamborghini, with 2014 sales of 10.2 million vehicles and revenues of €202 billion.