CompleteCar

Trouble at the Volkswagen mill?

Normally, a spat between corporate executives is pretty small beer, even if it does get out into the public domain. A classic case of having too many bulls in one field, a bit of handbags at dawn and next week all will be forgiven, right?

Perhaps and perhaps not, because this isn't just any little executive tiff but possibly the beginning of all-out war in the Volkswagen boardroom as all-powerful Ferdinand Piech has said that he's not getting on with Volkswagen boss Martin Winterkorn.

Piech, the grandson of Ferdinand Porsche, has been Volkswagen's overlord for three decades now, and is currently chairman of the board. He is often credited with the almost single-handed turning around of Volkswagen, which was close to being a financial basket case in 1993, to the massive corporate entity it is today. Even loss-making vanity projects that Piech has initiated, including the Volkswagen Phaeton and Bugatti Veyron, have their admirers.

But now, according to German newspaper Der Spiegel, Piech is staying 'at a distance' from Volkswagen's CEO Martin Winterkorn. Why? Because he's trying to distance himself from criticism that Winterkorn has failed to make the most of opportunities in the US market, and that margins from the Volkswagen brand itself are still too slim, in spite of a round of cost-cutting. Volkswagen is making profits, huge profits, as a group, but a disproportionate amount of those profits come from Audi, which is putting the pressure on both Audi to keep its performance up and on Winterkorn to improve Volkswagen's own-brand margins.

Winterkorn for his part has told Bloomberg news that he's ready to fight his ground, saying that his strategies just need time to bear fruit and that he intends to see out his current contract into 2016. Rumour has it that Winterkorn has his eyes on Piech's seat at the head of the board.

There are further complications. Volkswagen, for all that it is a corporate monolith, is still very much a family company with 51 per cent of the firm still owned by the conjoined Piech and Porsche families. Wolfgang Porsche, who is also a Volkswagen board member and is seen as the current spokesperson for the Porsche family, said in a statement that Piech's comments were of a personal nature and had not been previously cleared with the board or the Porsche-Piech families.

The State of Lower Saxony, which also has a major stake in Volkswagen and basically oversees workers' and employees' rights within the Volkswagen Group's German operations, has also backed Winterkorn. This sets us all up with a fascinating internecine war - the 77-year old Piech on one side (and Piech is very, very rarely on the losing side of anything) and Winterkorn, Lower Saxony and the Porsche family on the other.

While that looks a one-sided battle from this perspective, never forget that Piech is far too much the canny customer to simply let something like that slip out in an interview. If he said it, he means it and it is part of some strategy.

So, this is a basic, everyday boardroom bust-up - but it's one where the stakes are profits and shares that would dwarf the national debt of many nations. Jackie Collins couldn't have given us a better set-up...

Written by
Published on April 13, 2015