VW Labor Head Sees Chairman Piech, CEO Winterkorn Staying

Volkswagen AG Chairman Ferdinand Piech and Chief Executive Officer Martin Winterkorn will probably stay at least until 2018 to push forward a growth plan, the automaker’s top labor representative said.

“I’d be one of the first people to know if the situation changes” among the manufacturer’s management, Bernd Osterloh, head of Volkswagen’s works council, said at a press conference near company headquarters in Wolfsburg, Germany. Piech “had no plan to resign” last year, counter to a newspaper’s report at the time, said Osterloh, who is also a member of VW (VOW)’s supervisory board.

VW, the world’s third-biggest auto producer, reported record deliveries in 2013 as surging demand in China enabled the company to outsell General Motors Co. (GM) in the country for the first time in nine years. Osterloh said the main VW brand, which sold fewer cars in the U.S. in 2013, has shown a “catastrophic” performance in that market. Raising Volkswagen’s U.S. presence is critical to Winterkorn’s goal of beating GM and Toyota Motor Corp. (7203) in global sales by 2018.

The life cycle of VW’s models in the U.S. “has been miscalculated,” and the carmaker underestimated price competition, Osterloh said. “We won’t have a better situation in the U.S. before 2016 or 2017,” when a new mid-size sport-utility vehicle is rolled out.

Winterkorn’s Term

Winterkorn, 66, has a five-year contract with VW that expires in 2016. Piech, 76, thwarted efforts by Porsche SE, which is controlled by his family, to acquire VW in 2009, and is now in his third term as board chairman after retiring as CEO in 2002. His wife, Ursula, gained a board seat in 2012.

Osterloh said he sees no lack of internal candidates to succeed Winterkorn eventually.

VW said on Jan. 12 that it plans to invest more than $7 billion over the next five years in North America to revive growth. In contrast to a 6.9 percent drop in the VW nameplate’s U.S. deliveries, the company’s premium Audi division sold 13 percent more cars and SUVs in the country last year, while demand at the Porsche brand surged 21 percent.

The German company’s plant in Chattanooga, Tennessee, is the favored production site for the mid-size SUV in North America, though the company is still weighing the location because a factory in Puebla, Mexico, offers lower costs, Osterloh said today. The new vehicle would help improve utilization of the Chattanooga plant, he said.

Labor Vote

A potential vote by employees on representation by the United Auto Workers union, which is looking to set up a works council at Chattanooga, will be unrelated to the SUV decision, Osterloh said. The timing has been hampered by legal complaints filed by four Volkswagen employees at the site against the UAW’s initiative, he said.

Works councils are employee bodies designed to resolve labor disputes and protect jobs across the workforce at most large German companies. Union leaders frequently hold the top spots on the councils, though the groups represent all employees, even those who aren’t union members. VW and the UAW met in Wolfsburg in August to consider setting one up at the Chattanooga factory.

Volkswagen is looking most closely at a Polish site for building the Crafter commercial van, a model the company is taking over once a production partnership with Daimler AG expires, though other plants including one in Turkey are possible, Osterloh said. Volkswagen’s supervisory board may decide on that model in February, he said.

The board may also decide this year on an entry-level car that would be targeted at China and Southeast Asian markets, Osterloh said. Winterkorn said in 2012 that VW is looking at adding a model priced at about 7,000 euros ($9,480) under a new low-budget brand.

To contact the reporter on this story: Christoph Rauwald in Stuttgart at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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