Winterkorn vs Piech: Discord in VW’s leadership

Volkswagen's efforts to become the world’s largest car maker are in full swing. However, while the sales charts have been gaining ground, VW’s upper level management has been engaged in a feud. The Porsche and Piech families that head Volkswagen AG, have been engaged in a battle involving the future of VW CEO Martin Winterkorn, who is defending himself against efforts to oust him.

The reports came in after VW chairman Ferdinand Piech, publicly criticized the CEO and stated his move of distancing himself from Winterkorn. While Piech has expressed his discontent, his cousin and Porsche Chief Wolfgang Porsche, has come out in support of Winterkorn, stating that Ferdinand Piech’s comments are his private opinion. Labour leaders and the state of Lower Saxony - which owns a fifth of VW's voting shares, have also come out in Winterkorn’s support. Porsche, the labour leaders and the state of Lower Saxony hold 14 seats out of 20 on the board, which could effectively prove to keep Winterkorn safe.

Under the CEO’s leadership the group has seen a large level of expansion in both, the number of brands under its belt and the number of production plants worldwide. The Volkswagen group is now on its way to beat Toyota and General Motors as the world’s largest car maker by sales. The achievement could be seen as early as this year as Toyota itself expects a drop in sales due to a slump in its home market of Japan.

However, Winterkorn has reportedly encountered growing opposition from certain members of the board, due to sluggish sales in the USA and little progress in the development of a low-cost car targeting emerging markets.

Ferdinand Piech is now 77 and is expected to retire in 2017. Winterkorn’s contract is due to expire in December 2016 and if renewed, he is expected to become Piech’s successor as VW’s Chairman.

Source: Bloomberg