Volkswagen CEO Pischetsrieder steps down

http://www.msnbc.msn.com/id/15606702/


Volkswagen CEO Pischetsrieder steps down
Audi division chief seen set to replace him

BERLIN - Volkswagen AG said Tuesday that Bernd Pischetsrieder will step down as chief executive of Europe's biggest automaker and will likely be replaced by the head of the company's Audi unit.

Volkswagen said the leaders of its board of directors recommended that Audi CEO Martin Winterkorn take over as Volkswagen CEO on Jan. 1. The full board will decide on the move at a meeting on Nov. 17, it said in a statement.

Pischetsrieder is leaving the Wolfsburg-based company without seeing through a drastic restructuring program including massive job cuts and longer working hours, especially in Germany.

Volkswagen's earnings have begun to improve, boosting its share price. However, Pischetsrieder has been dogged by speculation that powerful labor unions and politicians are critical of his strategy.

different take...from NY times...

After Power Struggle, Volkswagen Ousts Its Chief

http://www.nytimes.com/2006/11/07/automobiles/08vwcnd.html?ei=5088&en=ba57b3aebdaf7fe9&ex=1320555600&adxnnl



After Power Struggle, Volkswagen Ousts Its Chief
By MARK LANDLER
FRANKFURT, Nov. 7 — 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.

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. Piëch, 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 Dudenhöffer, director of the Center for Automotive Research in Gelsenkirchen. “Porsche and Piëch 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. Piëch. A grandson of the founder, Ferdinand Porsche, Mr. Piëch 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. Piëch 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. Piëch 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 protégé of Mr. Piëch’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 Piëch was resisting,” said Arndt Ellinghorst, an analyst at Dresdner Kleinwort. “Winterkorn is someone who will always do everything that Piëch 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. Piëch 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.”

And this not long after he says "we don't need anyone" in short speak. ;)

I don't understand why VW is so interested in lowering prices by cost-cutting since they are attempting to be viewed as a "premium" brand. Mercedes tried to compete at the lower level and it killed their reputation and reliability records.

-Mike.

Every company get's profit hungry. It's just the nature of the beast.

Investors have spoken...;)

http://www.cbsnews.com/stories/2006/11/08/ap/business/mainD8L8U06G1.shtml

Volkswagen Shares Fall on CEO Switch

Volkswagen shares fall after Europe's biggest carmaker says CEO to be replaced at end of 2006

(AP) Shares of Volkswagen AG fell Wednesday as investors pondered whether the decision by Europe's biggest car maker to replace its chief executive at the end of the year would help the company stay competitive.

Shares of VW fell 1.5 percent to 80.05 euros ($102.10) in Frankfurt trading.

On Tuesday night, Volkswagen said that Chief Executive Bernd Pischetsrieder, 58, who was given a contract extension in May through 2012, would leave the company on Dec. 31. He will be replaced by Martin Winterkorn, the head of VW's luxury car unit Audi AG.

The decision came as VW is cutting up to 20,000 jobs, instituting longer working hours at its German plants and trimming costs _ a difficult program that Pischetsrieder instituted in a bid to compete with Asian automakers and to try and snare a large piece of the U.S. market.

VW's executive committee did not explain the reasons for Pischetsrieder's departure or say whether he would continue in any role at the company.

Some media reports suggested Pischetsrieder's ouster came as part of a push by Porsche AG _ the single largest shareholder in Volkswagen _ to consolidate control over the company.

Porsche AG holds 21.2 percent of VW and signaled last month that it plans to increase that to 25 percent. Porsche has said the stake, large enough to give it blocking power over corporate decisions, was aimed at protecting VW _ a supplier for nearly a third of Porsche's production _ from any hostile foreign takeover.

The business daily Handelsblatt suggested it could have had to do with his role in expanding VW's stake in MAN AG amid the truckmaker's ongoing effort to acquire Swedish rival Scania AB.

In Stockholm, Scania said Pischetsrieder would remain its chairman despite VW's decision.

"Like all other board members, he has a mandate to stay until the next annual general meeting unless he decides differently himself," Scania spokeswoman Cecilia Edstroem told Dow Jones Newswires. The next meeting is in May 2007.

Scania, and its second-largest owner Investor AB both confirmed they had "established contact" with VW and MAN.

Volkswagen is the biggest shareholder in both Scania and MAN, which is mounting a hostile takeover for the Swedish truck maker.

Despite the recent contract renewal, German magazine Focus Online said the decision came after Pischetsrieder decided that the executive committee of VW's board of directors had lost confidence in him.

Analysts were mixed on the move, noting that Winterkorn, who has overseen solid growth and profit at Audi, is more of an engineer than a corporate turnaround specialist.

"Martin Winterkorn has had a successful tenure as CEO of Audi since 2002, lifting the stature of the brand and increasing sales and profits significantly," said Stephen Cheetham, senior European auto research analyst of Sanford Bernstein in London. "But he has been a better engineer than communicator, and it is unclear how he will cope with the highly politicized demands of the VW group CEO role."

But Willi Diez, an analyst with the Institute for Automobile Business in Mainz, said the decision is a signal that VW expects Winterkorn to take his product offensive at Audi and expand it across all of Volkswagen.

The appointment of Winterkorn "is an expression that (the board) wants him to take the company forward on a major product oriented offensive," he told ZDF television.

Pischetsrieder joined VW from BMW, which he left after a dispute over his disastrous 1994 decision to buy Britain's MG Rover Group Ltd.

Winterkorn, 59, joined Audi in 1981 and held various positions at VW before becoming the CEO of Audi, which also includes the SEAT brand, in 2002.

Citigroup Investment Research downgraded Volkswagen to hold from buy after the announcement.

"With Dr. Pischetsrieder's resignation, the restructuring story at VW can't be sustained," it said, but added that the move shouldn't be seen as a launching pad for a Porsche takeover.

Volkswagen said the executive committee of its board of directors recommended Winterkorn take over on Jan. 1. The full board will decide on the move at a meeting on Nov. 17, it said in a statement.

And this not long after he says "we don't need anyone" in short speak. ;)

I don't understand why VW is so interested in lowering prices by cost-cutting since they are attempting to be viewed as a "premium" brand. Mercedes tried to compete at the lower level and it killed their reputation and reliability records.

-Mike.

I think what you said is probably what Piëch is thinking. While I generally like the idea of an automobile company run by a product driven engineer type, I think Piëch pushed this premium VW idea way too far. Phaeton was a disaster, and I don't think a few more premium products would push VW's image up as high as Piëch wants. They probably want to do something with their world's least efficient auto labor force first, but I guess that may never happen now.

VW's reliability records are terrible yet their "perceived" reputation allows
them to keep selling cars!?!

In my humble opinion: Mexican assembled VW are nice looking overpriced junk

the CEO in charge better work on the "reliability rate" before
he thinks he will dominate the world with VW's

Gone are the days were VW ran forever, I have never seen a brand of cars
for "every day people" that needs to spend so much time in the service department.

A well made car only goes in for scheduled maintenance: a concept completely foreign to VW fans

I don't think the place where these cars are being built is the problem, it's just VW's lack of attention as a body. They've lived in the glory days and have overlooked their reliability factors.

In my humble opinion: Mexican assembled VW are nice looking overpriced junk



The vast majority of problems of VWs have absolutely nothing to do with the assembly process. In fact, it's the German workers at Wolfsburg that is notoriously overpaid and underworked.

I don't think the place where these cars are being built is the problem, it's just VW's lack of attention as a body. They've lived in the glory days and have overlooked their reliability factors.

The vast majority of problems of VWs have absolutely nothing to do with the assembly process. In fact, it's the German workers at Wolfsburg that is notoriously overpaid and underworked.

Just to clarify: I'm not knocking the Mexicans in my above statement by any means .....I am referring to the fact that ever since the vast majority of the U.S. market VW's assembly was transferred to Mexico (think of MY93+) things have tumbled down like crazy... & yes it has been company wide, Germany isn't an exception.
The South of the border referance was made since most of our USDM come from there.