VW seeks to create distance from power struggle

Volkswagen's management heralded a return to business as usual at its annual meeting but shed little light on the power struggle that forced the resignation of Ferdinand Piech, the chairman. 

Martin Winterkorn, the chief executive from whom Mr Piech publicly distanced himself last month, triggering the leadership dispute, said the past couple of weeks had "been eventful ones, to put it mildly". But VW now had "clarity about our future direction" and "can concentrate fully on our business". 

In an effort to return investors' focus to operational matters, Mr Winterkorn announced a new holding structure for Scania and MAN, VW's truck units, which it hopes will deliver further synergies and speed up decision making. "We cannot and must not stand still," Mr Winterkorn said. 

For the first time in more than two decades, Volkswagen shareholders gathered in Hanover on Tuesday without Mr Piech, who resigned from the supervisory board 10 days ago. Mr Piech served as CEO from 1993 to 2002 and then as chairman.

Berthold Huber, interim chairman, opened the meeting, wearing a red tie befitting his background as a former head of the IG Metall engineering union. He praised Mr Piech's "extraordinary contribution" to VW's success and said the board would take its time in finding a permanent successor. 

Investors hope Mr Piech's resignation will present an opportunity for VW to reform governance and leadership structures, but there are also fears it will cement the dominance of family, labour and local government interests, to the detriment of minority shareholders, 

Hansgeorg Martius, head of the SDK shareholder protection association, said the appointment last week of two of Mr Piech's nieces to the supervisory board had furthered gender diversity but VW also required a much "broader spread" of interests on the board. 

Large fund managers stayed away from the meeting, so it was left to small investors and shareholder protection groups to demand an explanation for the leadership spat. 

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Mr Piech has not explained why he distanced himself from the CEO, fuelling speculation he was dissatisfied with developments at VW. 

Although VW generated €11bn in net profit last year, problem areas include the low margin of the core passenger car brand, falling sales in the US and failure to develop a budget car for China. 

While paying tribute to Mr Piech as a man who "shaped the automotive industry like no other", Mr Winterkorn defended his own record.

"Much has been written about alleged problem areas and improvements that need to be made . . . [but] don't be fooled," he said. "We know what we have to do in our large, global group. And we started doing it some time ago. The supervisory board has been a crucial supporter in every step of this journey." 

In a show of unity, the CEO toured a display of VW's vehicles accompanied by Stephan Weil, premier of Lower Saxony, which holds 20 per cent of VW voting shares, and Wolfgang Porsche, Mr Piech's cousin who sits on the supervisory board.

Asked what would become of VW without the former chairman, the normally gregarious Mr Porsche pursed his lips and did not comment.

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