Ferdinand Piech, chairman and former chief executive officer of Volkswagen AG, resigned after losing a power struggle, abruptly ending more than two decades atop Europe’s largest carmaker.
Piech, 78, stepped down from all posts at the German automaker with immediate effect, the Wolfsburg-based manufacturer said in a statement on Saturday. His wife Ursula Piech, a former kindergarten teacher who was controversially appointed to the board three years ago, also left her post.
His resignation marks the climax of a feud that threw Volkswagen into disarray. Piech sparked the tension two weeks ago by publicly challenging the authority of CEO Martin Winterkorn and dismissing him as a potential successor as chairman. His departure ends the reign of an executive who pulled the company back from the brink in the 1990s and transformed it into a global powerhouse that makes vehicles ranging from racy Audi sedans to excessive Bugatti supercars to hulking Scania trucks.
“This is the end of a great era,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “The situation wasn’t tenable. The power struggle had to be decided one way or another.”
Since Piech became CEO in 1993, the company acquired sports-car icon Porsche, supercar maker Lamborghini, British luxury marque Bentley, Czech brand Skoda, Ducati motorcycles, as well as MAN and Scania heavy trucks. During that period, Volkswagen’s market value rose about 15-fold to 110 billion euros ($119 billion), according to data compiled by Bloomberg. Meanwhile, Toyota Motor Corp. rose about fivefold, and GM was forced to reorganize under bankruptcy protection.
Piech’s attack on Winterkorn, a close confidant for decades, came without explanation. The spat continued even after other board members backed Winterkorn, who has led the company to record profit and close to overtaking Toyota as the world’s biggest carmaker. Piech’s increasing isolation forced his exit.
Piech, a grandson of VW Beetle creator Ferdinand Porsche, was a meticulous and daring engineer. In the late 1960s, he pushed forward development of the Porsche 917, a project that could have triggered the carmaker’s collapse if it failed. The vehicle ended up being one of the most successful race cars of the 1970s. After joining Audi, he spearheaded the brand’s quattro four-wheel drive technology and use of lightweight aluminum components, laying the foundations for Audi to become the world’s second-largest luxury-car brand.
Those engineering successes were accompanied by a ruthless management style. He ended careers of a long list of executives including hand-picked CEO successor Bernd Pischetsrieder and former Porsche boss Wendelin Wiedeking. But in the battle over Winterkorn, the VW patriarch lacked support of other power players such as the company’s influential works council and its home state of Lower Saxony.
“We deeply regret the developments of the last few days,” said Wolfgang Porsche, Piech’s cousin and the chairman of the holding company that owns the majority of VW voting shares. “We thank Ferdinand Piech for his decades of extraordinary and highly successful service.”
Piech, whose term as chairman of VW’s supervisory board was due to expire in April 2017, is also an indirect shareholder in Volkswagen and still can exercise influence through his stake as well as through the family holding structure, which has rules in place to prevent a public sale of stock. Piech hasn’t commented and his plans are unclear.
“We assume that Mr. Piech doesn’t want to damage Volkswagen with his stake as it’s his life’s work,” Deputy Chairman Berthold Huber, an official with the IG Metall union, told reporters in Hanover on Saturday. He’s taking over Piech’s responsibilities on the board until a successor has been found.
The full board is scheduled to convene in a regular session the day before Volkswagen’s annual shareholders meeting on May 5. They will be tasked with restoring calm at the company.
Huber as well as Lower Saxony Prime Minister Stephan Weil were part of the board’s six-person leadership committee that held an emergency meeting on April 16 in Salzburg. At the gathering, other board members showed they were aligned against Piech and issued a statement the next day backing Winterkorn and proposing to extend his contract beyond 2016. Still, reports surfaced that Piech was still seeking the CEO’s dismissal, leading to a final showdown.
“The discussion of the last two weeks have been damaging for Volkswagen,” prompting the committee’s action regarding Piech, Weil said in a statement.