Munich: A rift between Volkswagen’s two most senior executives threatens to create a power vacuum, hastening the search for a new leader who has the backing of the controlling families, key shareholders and labour unions.
CEO Martin Winterkorn suffered a public dressing-down by Chairman Ferdinand Piech, who told Der Spiegel magazine that he had distanced himself from his former confidant and no longer wants him as the next chairman.
With Winterkorn’s prospects of getting his contract extended beyond 2016 now in doubt, Europe’s largest carmaker will likely need a replacement sooner than planned. Matthias Mueller, who oversees the Porsche sports car division, may hold the best cards as his background in engineering and his operational experience meet Piech’s specifications. He also enjoys a broad support base, particularly from the families that control Volkswagen.
“Piech’s comments have caused a lot of agitation,” said Marc-Rene Tonn, a Hamburg-based analyst at M.M. Warburg. “It’s clear there are significant differences of opinion on a number of matters.”
The rare public comments from Piech, a grandson of VW Beetle creator Ferdinand Porsche, sent shock waves through Volkswagen’s headquarters in Wolfsburg, Germany, and revealed deeper divisions as power players battle to set the agenda for the era after Piech steps aside in 2017. An orderly transition that would have seen Winterkorn’s tenure prolonged before he moves on to the chairman post now seems unlikely.
A smooth transfer would have given new additions such as former BMW executive Herbert Diess and new trucks chief Andreas Renschler time to prove themselves at Volkswagen and vie for the top job. Both are engineers and would therefore fit Piech’s requirement for the role, unlike Audi boss Rupert Stadler and Chief Financial Officer Hans Dieter Poetsch.
Another internal candidate is Winfried Vahland, 60, who runs the Czech brand Skoda.
Mueller, 61, has a degree in information technology and has led the Porsche division since October 2010 following a career at the namesake VW brand and Audi. He was appointed in February to Volkswagen’s management board, which comprises the parent company’s top executives, including Winterkorn, and is appointed by the supervisory board.
Hands-on style
Mueller could help mend fences with his more carefree demeanour than Winterkorn, who is typically seen in public sporting boxy double-breasted suits. The Porsche boss, with silver hair, chunky sideburns and azure blue eyes, personally takes part in Porsche fan events, demonstrating a hands-on style that appeals to the Porsche and Piech families.
Last month, Mueller, who has an apartment in a trendy part of Stuttgart, caused a stir when he suggested he would consider the top VW post if asked. He claimed that a comment made earlier this year about being too old to succeed Winterkorn was misinterpreted.
At stake is Piech’s legacy and the future of the automaker, which has become a behemoth with 12 brands and more than half a million employees. His style of consolidating power in the hands of a few trusted managers left the company slower to react to the demands of globalisation.
Such organisational deficiencies contributed to a floundering US business and thin profit margins at the namesake VW brand, even as profits from Porsche and Audi and surging demand in China fuelled growth worldwide.
Piech, whose term as chairman runs out in April 2017, joined Audi 40 years ago after the descendants of Ferdinand Porsche, the creator of the VW Beetle, banned family members from operational roles at the maker of the 911 sports car, which was an independent company before its acquisition by Volkswagen. He set the foundations for Audi’s rise to become the world’s second-biggest luxury-car brand. He was promoted to Volkswagen CEO in 1993 and then took the chairman role in 2002.
Piech eventually sided with the German state of Lower Saxony and VW’s unions to oppose Porsche’s takeover bid, which was backed by his cousin Wolfgang. While the rift with the Porsche clan has again surfaced, Piech’s former allies have turned against him, saying they back the CEO.
VW’s powerful works council, the state of Lower Saxony and Wolfgang Porsche, Piech’s cousin as well as chairman of the holding company that owns a majority of VW’s common stock, quickly rallied to Winterkorn’s side in a dispute that’s about more than the relationship between two executives who have worked side by side for decades.
The drama in Wolfsburg carries a whiff of the intrigues that plague the medieval fantasy kingdom of Westeros in the television show Game of Thrones,” said Arndt Ellinghorst, an analyst at Evercore ISI, said in a report to clients. “At this point, answering who will succeed to the top position in Wolfsburg at VW is about as easy as predicting who will end up on the throne in Westeros,” Ellinghorst said.
