VW chairman hints at tension with CEO

Volkswagen's powerful patriarch and chairman, Ferdinand Piech, has distanced himself from his chief executive in comments that are set to reignite the debate about succession at Europe's biggest carmaker by sales.

Martin Winterkorn, VW CEO, is facing growing criticism from the supervisory board and no longer has a chance of succeeding Mr Piech as chairman, according to a report in Der Spiegel magazine on Friday.

In a report claiming that relations between the two men have been difficult for some time, the publication quoted Mr Piech, 77, as saying: "I'm at a distance from Winterkorn."

His comments came as a shock to investors, as Mr Winterkorn was Mr Piech's protege and had been his close confidant for decades.

Stephan Weil, prime minister of the state of Lower Saxony which holds 20 per cent of the voting shares in VW, told the dpa news agency: "I am unpleasantly surprised by the quoted comments of professor Piech . . . I consider a public discussion about the top [officials] of VW to be damaging". Mr Weil also sits on VW's supervisory board.

Arndt Ellinghorst, an analyst at Evercore ISI, said: "In any normal company, a CEO would be materially destabilised by such harsh commentary from his chairman. It seems like Piech has just switched gear with respect to succession planning at Europe's largest employer."

He added: "Given Piech's comments, and the fact that the chairman's position will seemingly allude him, we question whether [Winterkorn] may or may not look to retire early."

VW declined to comment, or to confirm that Mr Piech's comments were accurately reported. An official at Mr Piech's office in Austria also declined to comment.

However, Bernd Osterloh, a supervisory board member and VW's works council chief, leapt to Mr Wintekorn's defence.

"We have a clear position and nothing has changed," he said. "With Dr Winterkorn on board, we have one of the most successful car industry managers." He added that if it was up to the works council, Mr Wintekorn's contract would be extended.

Mr Winterkorn became VW CEO in 2007. Under his leadership, its stable of brands has grown to 12, its revenues have surpassed €200bn and its annual vehicle sales have topped 10m.

But, last year, the carmaker was forced to announce a €5bn cost-cutting plan to address the low profit margin of its core passenger car brand.

VW's efforts to build a bigger sales footprint in the US have also stalled and its sales are falling in emerging markets.

In December, Mr Winterkorn said he would surrender his second role as head of the VW brand - a dual role that some investors had criticised. VW hired Herbert Diess, a top executive at BMW, to take control of the underperforming brand.

Mr Winterkorn's contract ends in 2016 and it had been widely assumed he would later succeed Mr Piech as chairman.

Mr Piech told Der Spiegel he would make sure "right" people become chairman and CEO and would decide on the appointments in 2017, shortly before his term as chairman ends.

He confirmed that he would not seek to appoint a family member as chairman, ruling out his wife Ursula, a former nanny who joined the supervisory board in 2012. Both the CEO and chairman positions will be filled by someone with an engineering background, he told Der Spiegel.

Speculation about who might succeed Mr Winterkorn as chief executive has focused on a small group of VW group executives. These include Skoda-chief Winfried Vahland, Audi-boss Rupert Stadler, Porsche chief Matthias Mueller and newcomer Mr Diess. However, Mr Stadler's finance background may now be seen as a disadvantage.

Members of the Piech and Porsche families still control half of VW's voting shares but Mr Piech rarely speaks to the press.

On the rare occasion that he breaks his silence, his remarks tend to be pointed, and then carefully parsed. Bernd Pischetsrieder resigned as VW chief executive in 2006 only a few months after Mr Piech said his future was an "open issue".

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