updated 11/8/2006 11:34:17 AM ET 2006-11-08T16:34:17

The steering committee of Volkswagen’s supervisory board voted against Chief Executive Bernd Pischetsrieder in a dispute over the pace of rationalisation at Europe’s biggest carmaker, prompting him to step down, a source familiar with the situation said on Wednesday.

“The decision was six to zero,” the industry source said a day after Europe’s biggest carmaker surprised markets with news that Pischetsrieder would go at year’s end.

Should the full supervisory board agree at a meeting on Nov. 17, Martin Winterkorn, the head of the group’s premium unit Audi, will take over as chief executive at the start of 2007.

VW refused to give any reason for the change, but the source said Pischetsrieder, 58, threw in the towel after failing to bridge a difficult gap between board members eager to boost VW’s efficiency and labour demands to protect jobs.

“The pace of restructuring has not been fast enough. They got into an argument about that and I guess Pischetsrieder got fed up with all these issues, all the back and forth, and he quit,” the source said.

“That means the pace of restructuring will speed up.”

Another source familiar with the situation said he did not think differences over the group’s strategy for its commercial vehicles business or the extent of its support for German truckmaker MAN’s contested bid for Swedish rival Scania were a factor in Pischetsrieder’s departure.

VW is the biggest shareholder in bother MAN and Scania and has been supporting a tie-up.

“I cannot imagine that it played a role,” the person said.

Speculation among analysts centred on a possible rift over VW’s trucks strategy and on concern that powerful VW Chairman Ferdinand Piech was interfering in management.

“Investors will likely fear that their ’bogeyman’, Dr Piech, is back in effective control,” Citigroup wrote to clients.

Piech is a former chief executive of Volkswagen and grandson of legendary VW Beetle developer Ferdinand Porsche. His family controls sports car maker Porsche AG, which is also VW’s biggest shareholder. 

In a statement, Volkswagen’s powerful works council that co-manages the group through its representation on the supervisory board said only that it respected the CEO’s decision to resign and thanked him for his work.

“The group directives he introduced lay the groundwork for a change in the corporate culture,” the works council said.

It went on to praise Winterkorn as a suitable successor.

“If he were head of a soccer team, we would say of him: ’He motivated his Audi squad to the highest performance level and led it to the top of the tables’,” it added in a statement.

Volkswagen shares fell as investors were left guessing about possible strategic changes and what the future holds for Wolfgang Bernhard, head of the VW brand group and a top lieutenant in Pischetsrieder’s efficiency drive that has cut thousands of jobs in high-cost Germany.

“Corporate governance is definitely an issue at Volkswagen again,” Bank Sal Oppenheim said in a research note.

Copyright 2012 Thomson Reuters. Click for restrictions.


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