A potential showdown this week could resolve tensions at Europe’s biggest carmaker.
Six key members of Volkswagen’s supervisory board will convene on Thursday in an extraordinary meeting that reflects growing concern about the very public power struggle between Ferdinand Piëch and Martin Winterkorn.
Mr. Piëch, supervisory board chairman at Volkswagen, withdrew his support for the company’s chief executive Mr. Winterkorn, in a call to news magazine, Der Spiegel, last Friday, saying, “I am distancing myself from Winterkorn.”
The six members who will meet today make up Volkswagen’s presiding committee which sets the agenda for the supervisory board, the non-executive board which hires and fires chief executives.
The presiding committee members include Mr. Piëch and Bertold Huber, the deputy chairman, who represents the powerful IG Metall trade union. The other members include Wolfgang Porsche who represents the Porsche family interests; Bernd Osterloh, VW’s chief labor representative; Stephan Weil, the governor of the state of Lower Saxony, which holds a stake in the company, and Stephan Wolf, the deputy labor representative.
Since Mr. Piëch’s comments, there have been attempts by members of the supervisory board to mediate between the two parties amid concern about how long Mr. Winterkorn can now continue in his post. Mr. Winterkorn has been chief executive since 2007 and his contract was due to run until 2016. In the past when Mr. Piëch has withdrawn his support from chief executives, they have left the company.
Volkswagen’s main shareholder meeting is planned for May 5. According to people close to the situation, it is unclear whether Mr. Piëch and Mr. Winterkorn will be able to share the stage.
“We’re trying to get both sides of the argument.”
While Mr. Winterkorn had largely succeeded in leading the company forward, there are several issues where work is needed, starting with restructuring the Volkswagen brand but also raising profitability and integrating the two truck divisions.
There is further uncertainty around Volkswagen’s future leadership because Mr. Piëch is also expected to leave the supervisory board in 2017.
The solution to the rift depends not only on who replaces Mr. Winterkorn but also on the replacement for Mr. Piëch.
“It depends on the whole package,” said an insider close to one of VW’s most important shareholders, the Qatar Investment Authority.
The person was critical of Mr. Piëch’s critical remarks about Mr. Winterkorn, saying, “To distance himself from an acting chief executive without having first worked out who to present as an alternative with the supervisory board isn’t how we do business.”
The QIA is a wealth fund worth $200 billion owned by the state of Qatar and specializing in domestic and foreign investment. The QIA owns two VW share packages, recently worth €18 billion. The holdings, 12.8 percent of VW’s preferred options and 17 percent of Volkswagen’s ordinary shares, mean the carmaker is one of the QIA’s most important investments.
The QIA insider said diplomacy was needed to resolve the crisis and added that Mr. Piëch’s comments were even harder to understand given Mr. Winterkorn’s success in leading Europe’s biggest carmaker forward, putting it on track to replace Toyota as the world’s biggest carmaker.
Representatives of the QIA are in ongoing contact with Mr. Winterkorn and Mr. Piëch. “We’re trying to get both sides of the argument,” the source told Handelsblatt. The QIA insider called the situation “difficult” but said the fund members were initially observing developments rather than pushing for a vote.
The insider conceded that it would be difficult to keep Mr. Winterkorn now that he has fallen from grace. They said that the QIA wanted to “act as a mediator.”
The Qatari fund members have acted as mediators in the past, notably when the fund took over VW share options in 2009 that were previously held by Porsche. At the time, Qatar gave Porsche a €750 million credit that the car maker exchanged for a loan of the same amount that Volkswagen had given Porsche. Porsche initiated the takeover attempt but failed due to problems related to the financial crisis and related problems for the luxury sportscar company. VW ultimately incorporated Porsche as one of its brands into the group.
The power struggle at VW also comes at a time of change for the QIA. With two representatives on VW’s supervisory board, Hussain Ali Al Abdulla and Ahmad Al Sayed, the QIA has a strong voice but Mr. Al Sayed is only temporarily on the board. He is to be replaced by Sheikh Abdullah Bin Mohamed Bin Saud Al Thani, a member of the ruling family.
At VW, the changes go beyond Mr. Piëch and Mr. Winterkorn; other upcoming transitions are a replacement for the car maker’s chief of personnel, Horst Neumann, at the end of the year.
Usually at German companies, supervisory board members vote to decide who will take the post of chief executive; at VW the power is concentrated in the hands of the Porsche and Piëch families but other groups will weigh in too.
Volkswagen is in the midst of a transition, with streamlining ahead for its brands, moves to raise profitability, to address problems with its business in the United States and integrate the truck businesses. Before proceeding with these plans, the question of who actually runs the company will have to be resolved.
Handelsblatt’s Robert Landgraf is deputy head of the finance section; Carsten Herz is London correspondent, Markus Fasse covers companies and markets, Christian Schnell and Martin Murphy write about the auto industry. Allison Williams contributed to this article. To contact the authors: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org