VW struggle in 'diplomacy phase' as investors weigh CEO change

Wed Apr 15, 2015 1:14pm EDT
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By Andreas Cremer and Ilona Wissenbach

BERLIN/STUTTGART (Reuters) - Volkswagen's (VOWG_p.DE: Quote) first leadership crisis in a decade has burst into the open with Chairman Ferdinand Piech's surprise public denunciation of CEO Martin Winterkorn -- but the standoff is now more likely to play out behind closed doors.

Piech, 77, will meet cousin Wolfgang Porsche and other family members within days, company sources said, to discuss the rift his comments appear to have opened between their branches of VW's controlling clan.

A full board meeting is likely to follow.

"A phase of diplomacy will set in now," said one source. The company declined to comment through a spokesman.

The turmoil at the top of Europe's biggest carmaker reflects Piech-Winterkorn tensions that have escalated in step with the chief executive's growing confidence, insiders say.

It has also shifted attention from VW's growth ambitions to governance and performance problems, as challenges pile up and the earnings outlook darkens following a run of gains.

VW shares edged lower to close at 242.70 euros on Wednesday, extending their decline since Piech's outburst to 2.8 percent. Any feud lasting beyond the company's May 5 shareholder meeting could prove more damaging.

"Change is coming anyway," Barclays analyst Michael Tyndall said, with Winterkorn's contract expiring in 2016 and Piech expected to retire the following year, as he turns 80.   Continued...

Volkswagen's CEO Martin Winterkorn (C) and Ferdinand Piech, chairman of the supervisory board (R) attend a media preview day at the Frankfurt Motor Show (IAA) in this September 10, 2013 file picture. REUTERS/Kai Pfaffenbach/Files