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New Chief at VW



In a sharp reversal, Volkswagen today ousted its chief executive, Bernd Pischetsrieder, six months after he appeared to win an internal power struggle by signing a new contract. Skip to next paragraphAndreas Rentz/Getty Images
Bernd Pischetsrieder, chief executive of Volkswagen, was ousted. 



Volkswagen, Europe?s largest carmaker, gave no reason for the decision by a select committee of its supervisory board, which voted to replace Mr. Pischetsrieder with Martin Winterkorn, the head of Volkswagen?s Audi division. The change will take effect at the end of the year.
Analysts and industry experts said the sudden shakeup bore the fingerprints of Volkswagen?s influential chairman, Ferdinand K. Pi?ch, who had tried to maneuver Mr. Pischetsrieder out of his post earlier this year, saying he had lost the support of employees.
Mr. Pischetsrieder clung to his job then, partly because of support from the state of Lower Saxony, one of Volkswagen?s largest shareholders. But analysts said the influence of Lower Saxony has waned as Volkswagen?s largest shareholder, Porsche, has tightened its grip.
?This is another step in Porsche saying, ?we will increase our influence over VW,? ? said Ferdinand Dudenh?ffer, director of the Center for Automotive Research in Gelsenkirchen. ?Porsche and Pi?ch dominate the supervisory board of Volkswagen.?
The announcement left analysts baffled since Mr. Pischetsrieder?s future had seemed secure in May, when Volkswagen?s board, after lengthy deliberation, extended his contract for five years. It throws Volkswagen back into management turmoil after a period of relative tranquillity. 
A courtly man with a trademark Cuban cigar, Mr. Pischetsrieder, 58, has the dubious distinction of having been forced out of two famous German carmakers: in 1999, he was dismissed as chief executive of BMW, following a calamitous investment in the British carmaker Rover.
Mr. Pischetsrieder?s latest troubles began a year ago when Porsche began buying shares in Volkswagen. Although Porsche said it wanted to shield the company from an unwelcome foreign takeover, it posed a potential challenge to Mr. Pischetsrieder?s efforts to streamline Volkswagen.
Porsche currently owns 21.2 percent of Volkswagen and has signaled its intention to raise its stake to 25.1 percent. Reports surfaced today that it might buy up to 29.9 percent of Volkswagen?s shares ? the most it can own without being legally required to make a takeover bid.
Porsche?s interests are closely intertwined with those of Mr. Pi?ch. A grandson of the founder, Ferdinand Porsche, Mr. Pi?ch and his family control the company. He is also Mr. Pischetsrieder?s predecessor as chief executive of Volkswagen, with strong views as to how that company should be run.
Last February, Mr. Pi?ch publicly undermined Mr. Pischetsrieder, saying it was an ?open issue? whether the board would extend his contract, because of opposition to him by unions and workers? representatives. Mr. Pischetsrieder was then warning about sweeping job losses.
Two months later, Mr. Pi?ch reversed course, saying he expected the contract to be extended. The prime minister of Lower Saxony, Christian Wulff, had thrown his support behind Mr. Pischetsrieder. Some analysts believe Mr. Wulff?s intervention saved the embattled chief executive.
Mr. Winterkorn, analysts said, is a prot?g? of Mr. Pi?ch?s. Both are talented automotive engineers with less experience in overhauling companies. Mr. Pischetsrieder was seeking to lower Volkswagen?s labor costs by cutting jobs in its German plants and renegotiating union contracts.
?Pischetsrieder was trying to push through decisions that Pi?ch was resisting,? said Arndt Ellinghorst, an analyst at Dresdner Kleinwort. ?Winterkorn is someone who will always do everything that Pi?ch says.?
Mr. Ellinghorst suggested that Porsche might be interested in taking over Audi, the luxury division of Volkswagen. Mr. Winterkorn has won praise recently in the German news media for closing the gap between Audi and the two prime German luxury brands, Mercedes-Benz and BMW.
Mr. Pischetsrieder?s departure also raises questions about the future of his chief lieutenant, Wolfgang Bernhard. As head of Volkswagen?s core brand, Mr. Bernhard is responsible for carrying out the cost-cutting plan devised by the board. A former No. 2 executive at the Chrysler Group, Mr. Bernhard has been viewed as a likely successor to Mr. Pischetsrieder.
Analysts, however, expressed some skepticism that Mr. Bernhard would be able to work with Mr. Winterkorn. Mr. Bernhard?s departure would unnerve shareholders, Mr. Ellinghorst said, since he is viewed as being integral to Volkswagen?s campaign to reduce its costs.
The shakeup also has potential implications for Volkswagen?s role in a takeover battle between two European truckmakers, MAN and Scania. Volkswagen had acquired a stake in MAN to influence its bid for Scania, and some analysts said Mr. Pi?ch might push for even more central role.
?The market will not be scared simply by Pischetsrieder?s departure,? Mr. Ellinghorst said. ?But the market could be scared by the two or three steps that might follow from it.?