Piech loses top post at VW

The power struggle crisis at the top of VW has finally been resolved with the shock resignation of its chairman Ferdinand Piech (79), leaving a void at the top of the second largest car company. However, a void at the top of VW may be better than a power struggle that disrupted the company’s operations, tarnished its impeccable image and distracted the management team for more than two weeks.
There is no doubt that Piech is responsible for his own downfall.
He picked up a conflict with the CEO Martin Winterkorn and schemed to replace him with Porsche CEO, Matthias Mueller.
When news leaked out last week that Piech had been lobbying family members behind the scenes to install Mueller at the helm of VW, the company’s powerful works council and its home state of Lower Saxony — a top shareholder — decided they had had enough.
They demanded a meeting of senior board members — the second emergency VW summit in a little over a week. Sources close to the company reveal that Piech was issued an ultimatum: resign or suffer the ignominy of being booted out in a vote of the board.
During his two decades at the helm of VW, Piech did a good job and got VW to be second in the world but he ruled the company like his personal fiefdom, summarily ending the careers of executives he disliked and ramming through controversial strategic decisions through sheer force of will.
Piech still owns 13.2 percent of the company shares worth 1.7 billion euros which he threatens to sell.
Other family members have first right of refusal before these shares reach the market.
The battle was not without cost to Winterkorn who some believe has become more vulnerable to the labor unions which saved his career.
He still faces tough issues of saving five billions euros of cost over two years and reviving the company’s performance in the US.
But things are looking up in VW after resolving of this damaging dispute and many stockbrokers have elevate VW shares to “buy” instead of “hold.”
VW shares have also gained 5 percent on the news. Now the company needs to focus on filling the void at the top.

— Adel Murad is a senior motoring and business journalist, based in London.
— adel.murad@ntlworld.com