Pischetsrieder Out, Winterkorn In at VW

Washington DC November 8, 2006; The AIADA newsletter reported that in a sharp reversal, Volkswagen yesterday ousted its chief executive, Bernd Pischetsrieder, six months after he appeared to win an internal power struggle by signing a new five-year contract, reported The New York Times.

Effective at the end of the year, Pischetsrieder will be replaced by Martin Winterkorn, the head of Volkswagen's Audi division.

Although Volkswagen gave no reason for the decision by a select committee of its supervisory board, analysts and industry experts said "the sudden shakeup bore the fingerprints of Volkswagen Chairman Ferdinand K. Piëch, who had tried to maneuver Pischetsrieder out of his position earlier this year, saying he had lost the support of employees."

The executive management shake-up also raises questions about Wolfgang Bernhard, head of Volkswagen's core brand.

Bernhard is responsible for carrying out the cost-cutting plan devised by the board; he was once viewed as a likely successor to Pischetsrieder.

Analysts expressed some uncertainty about Bernhard's ability to work with Winterkorn, but Bernhard's departure would unnerve shareholders since he is viewed as being integral to Volkswagen's campaign to reduce its costs, said Arndt Ellinghorst, an analyst at Dresdner Kleinwort.