Volkswagen’s Pischetsrieder To Quit
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Volkswagen AG, Europe’s largest carmaker, unexpectedly replaced chief executive officer Bernd Pischetsrieder with Martin Winterkorn, head of the company’s most profitable division.
Mr. Pischetsrieder, 58, will step down December 31, Wolfsburg, Germanybased Volkswagen said in a statement late today. Mr. Winterkorn, 59, has been head of the Audi luxury car unit since March 2002. The carmaker didn’t give a reason for Mr. Pischetsrieder’s departure.
Volkswagen Chairman Ferdinand Piech, who hired Mr. Pischetsrieder in 2000, earlier this year raised questions about whether he should be reappointed as CEO because of his clashes with labor unions over cutting as many as 20,000 jobs in Germany. The company’s supervisory board in May unanimously extended Mr. Pischetsrieder’s contract through 2012.
“People will want to know why the sudden departure,” the head of equity research at Cantor Fitzgerald in London, Stephen Pope, said. “Will this be a case of business as usual or are we about to see a new radical direction for Volkswagen and will that be a destabilizing effect on the share price?”
Shares of Volkswagen rose 80 cents, or 1%, to 81.25 euros today. The announcement of Mr. Pischetsrieder’s departure came after the market closed. The company’s shares have risen 82% this year, the best performance on Germany’s benchmark DAX Index, on optimism that Mr. Pischetsrieder’s cost cutting will boost profit at the namesake Volkswagen brand.
Mr. Winterkorn’s appointment means Europe’s two biggest carmakers will be led by new CEOs starting next year. Second-ranked PSA Peugeot Citroen today named Christian Streiff to run the Paris-based carmaker as of February, when current CEO Jean-Martin Folz retires.
Two months ago, Mr. Pischetsrieder worked out agreements with labor unions for longer workweeks as part of a drive to triple pretax profit by 2008 from 2004. Volkswagen posted a third-quarter profit on October 27,beating the median analyst estimate of a loss in the period.
Volkswagen is the second German carmaker that Mr. Pischetsrieder has led. Between May 1993 and February 1999, he was chief executive of Munichbased Bayerische Motoren Werke AG, the world’s second- biggest luxury carmaker at the time. Mr. Pischetsrieder lost the BMW post after failing to stem losses at the carmaker’s Rover unit.
Mr. Pischetsrieder joined Volkswagen in 2000 and succeeded Mr. Piech as CEO in April 2002,taking over a company that makes six times as many cars as BMW and covered every segment from the small Lupo to Lamborghini sports cars.
Mr. Piech, who once headed the Audi division and groomed Mr. Winterkorn, is the grandson of Ferdinand Porsche, the man who invented the “people’s car” back in the 1930s. Mr. Piech, 69, is also on the supervisory board of Porsche AG, the sports car company his uncle founded.
Last September, Mr. Piech stunned German industry by helping Porsche, which his family controls, to acquire 18.5% of Volkswagen, making it the largest shareholder. Porsche now owns 21.28% and announced in June it would acquire 3.9% more. Porsche said today it may buy as much as 29.9% of Volkswagen.
The Audi division has helped offset losses at Volkswagen’s namesake brand. Audi’s 2005 net income of 824 million euros ($1.05 billion) accounted for more than two-thirds of the group profit of 1.12 billion euros. Volkswagen brand chief, Wolfgang Bernhard, said in February the brand’s six western German plants lost “several hundred million euros”last year. He has since said he is aiming for the brand to break even this year.
Mr. Pischetsrieder tried to reduce competition among Volkswagen’s main brands by reorganizing the company into two divisions, one consisting of the Volkswagen, Bentley, and Skoda brands and the other including Audi, Lamborghini, and Seat.
In an effort to reverse overlapping models developed by his predecessor, Mr. Pischetsrieder shifted to building a range of vehicles on the same platforms, or underbodies.
Mr. Pischetsrieder was born on February 15, 1948, in Munich, the son of a local advertising magnate and the great-nephew of Sir Alec Issigonis, the British designer of Rover’s original Mini car. He graduated from the Munich Technical University with an engineering degree and joined BMW straight from school in 1973.
He rose to become head of production at BMW by 1990 before becoming CEO. He bought Birmingham, England-based Rover for 1 billion pounds ($1.8 billion) in 1994, without hiring investment bankers to assess the corporate value or quality of its physical assets, and over the next six years invested $6 billion more.
Peugeot chose Mr. Streiff, 52, just one month after he quit as head of Airbus SAS, the world’s biggest maker of commercial aircraft. Mr. Streiff left the Toulouse, France-based planemaker October 9, a week following his announcement of plans to cut spending by 30% and scale back the workforce amid delivery delays on the 555-seat A380 airliner.