You are here

Volkswagen patriarch's era of total authority ended with 500-mile trek

Ferdinand Piech's two decades of unyielding authority over Volkswagen AG ended after a 500-mile journey to Braunschweig, a small city in central Germany where just last year he was feted as a savior of jobs.

[FRANKFURT] Ferdinand Piech's two decades of unyielding authority over Volkswagen AG ended after a 500-mile journey to Braunschweig, a small city in central Germany where just last year he was feted as a savior of jobs.

Mr Piech was accustomed to imposing his will, but this time was different. He had been summoned for a hastily arranged emergency meeting of VW's supervisory board leaders, held on Saturday after Mr Piech defied fellow senior board members by continuing to seek the ouster of Chief Executive Officer Martin Winterkorn, according to people familiar with the situation, who asked not to be identified disclosing private details. Mr Piech had asked Matthias Mueller, the chief at the Porsche unit, last week to be ready to replace the CEO, the people said.

The board's leaders had already agreed to support Winterkorn at an April 16 meeting near Mr Piech's home in Salzburg, Austria. At that meeting, the 78-year-old VW chairman threatened to resign, accused Winterkorn of spying on him and claimed his cousin Wolfgang Porsche wanted him ousted, the people said. Efforts to reach Mr Piech for comment were unsuccessful.

In Braunschweig, Mr Piech was again confronted by Wolfgang Porsche, representatives of Volkswagen's influential labor leaders and Lower Saxony Prime Minister Stephan Weil. Whereas in the past Mr Piech could count on union and government support after saving jobs in the 1990s when VW was struggling, this time he'd overestimated his power. With the opposition clear, he and his wife Ursula Mr Piech resigned from Volkswagen's board with immediate effect.

"It's not an exaggeration to say that he is one of the most important personalities in the history of German industry," Weil said in a statement.

Following his resignation, Mr Piech can still exercise influence through the Porsche SE holding company, which owns 50.7 pe rcent of VW's common stock. Mr Piech remains a board member of Porsche SE and owns about 13 per cent of the holding company, according to a person familiar with the ownership structure. His capacity to impose his will is limited by agreements that require family members to vote as a bloc and offer shares for sale to relatives first, the person said.

Mr Piech, a grandson of VW Beetle creator Ferdinand Porsche, became CEO of the automaker in 1993 and chairman in 2002 after previously working for Porsche and Audi. He has a nearly unequaled automotive legacy: from the Porsche 917 race car, Audi quattro four-wheel drive and the Bugatti supercar to the use of aluminum in car bodies.

"He internalised the most important rule of the car industry: a good product solves all your problems," Wolfgang Ziebart, a former BMW AG board member who has headed engineering at Jaguar Land Rover, said in an e-mail.

Along the way Mr Piech promoted and then abruptly ended the careers of managers, including Winterkorn's predecessor Bernd Pischetsrieder and former Porsche chief Wendelin Wiedeking. His office manner is legendary. Mr Piech once berated an underling for going to the bathroom in the morning, saying such personal needs should be taken care of before arriving at work, according to a former employee, who asked not to be named.

While Mr Piech still had a cult-like status, his attack two weeks ago on Winterkorn, a gruff and imposing figure in Mr Piech's mold, was made without explanation after VW reported record profit. Other board leaders swiftly backed Winterkorn. But Mr Piech refused to stand down and instead continued to push for Winterkorn's ouster, even though he publicly denied the effort, according to people familiar with his actions.

"The developments of the last two weeks have led to a loss of trust between the chairman and the rest of the board members, which has proven to be unsolvable in the past few days," Berthold Huber, VW's interim chairman, said on Saturday.

And so Mr Piech found himself on the way to the board leaders' meeting at Braunschweig's small airport, a 20-minute drive southwest of Volkswagen's headquarters in Wolfsburg. It was quite a turnaround from a year ago, when most of VW's management attended a ceremony at which the city made him an honorary citizen to thank him for preserving jobs.