Volkswagen enters the post-Piech era

Volkswagen enters a new era following the abrupt resignation of controversial chairman Ferdinand Piech, who transformed the world's second-largest carmaker by sales into a global automotive powerhouse but frequently irked investors. 

The chairman threw in the towel following a tense meeting of top directors in Braunschweig on Saturday, which concluded that "the necessary mutual trust necessary for successful co-operation" no longer existed. Mr Piech's wife also resigned from the board. 

His exit underscored the influence at VW of the trade unions and regional government of Lower Saxony. They control 12 of the 20 seats on the supervisory board and both lost confidence in the chairman.

Analysts, meanwhile, hope Mr Piech's departure will herald a changing of the guard and greater sensitivity towards shareholder concerns.

"The majority of people would really welcome a fresh start that allows VW to tackle the major problems facing the business," said Arndt Ellinghorst, an analyst at Evercore ISI.

A survey of institutional investors conducted this month by Evercore ISI found that 80 per cent would welcome a change of chairman and 65 per cent a change in the CEO. 

In the past non-voting shareholders at VW were often frustrated by expensive acquisitions and flagship engineering projects that did not deliver profits. 

Mr Piech's corporate governance was also criticised, most famously for his decision to appoint his wife, a former nanny, to the board. 

Stuart Pearson, analyst at Exane BNP Paribas, said: "Long term, those seeing the glass half full may view this as an opportunity to improve corporate governance at VW."

Mr Piech's departure came two weeks after he withdrew his support from chief executive Martin Winterkorn - a tactic that backfired spectacularly and left him isolated on the board.

It was an undignified exit for a 78 year old whose engineering skill and ruthless ambition transformed VW's fortunes over two decades. Berthold Huber, former head of the IG Metall union and deputy chairman of VW's supervisory board, will take over as chairman on an interim basis.

The Piech and Porsche families control 51 per cent of the voting shares in VW via a holding company but the power struggle has left the wealthy families at loggerheads. 

It was unclear at the weekend what Mr Piech plans to do with his share of the holding but if he wanted to sell he would first be obliged to offer it to other members of the family.

Mr Huber assumed "that Mr Piech doesn't want to damage Volkswagen with his stake as it's his life's work". 

Mr Winterkorn was long seen as the next chairman of VW but his relationship with Mr Piech is now badly strained. The patriarch could use his shareholding to try to influence the selection of a replacement. Top directors said they would not rush to appoint a successor and tried to quell speculation about possible candidates. 

Additional reporting by Andy Sharman in London

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