DETROIT -- Ferdinand Piech has cemented his control of Volkswagen AG's top management.
That move is complete with today's announcement that Volkswagen brand chief Wolfgang Bernhard will leave the automaker at the end of the month.
News of Bernhard's departure is no surprise. It has been expected since November, when VW announced that CEO Bernd Pischetsrieder would be replaced on Jan. 1 by Martin Winterkorn.
Piech, who preceded Pischetsrieder as VW CEO and now is chairman of VW's supervisory board, hand-picked Winterkorn, the former head of the company's Audi unit.
Left unanswered is what Bernhard, a former COO of the Chrysler group, will do next.
Winterkorn has engineered a realignment of Volkswagen AG's brands, confirmed today by the supervisory board, separating them into high-volume and luxury groups. In addition to being CEO of Volkswagen AG, Winterkorn will run the high-volume Volkswagen brand group - the job that had been Bernhard's.
The board also approved creation of new management-level positions for sales, production and r&d. Winterkorn also will be responsible for group r&d, while his production boss at Audi, Jochem Heizmann, will head group production.
VW was considering putting Bernhard in charge of global production, sources told Automotive News Europe. But Bernhard opposed that. A key issue in the negotiations for Bernhard to leave the company was his demand that the company loosen a contract clause that prevents him from working for another automaker for two years.
Pischetsrieder hired Bernhard in May 2005 - after Bernhard was cast out by former DaimlerChrysler AG Chairman Juergen Schrempp - to help overhaul VW.
Volkswagen was burdened by high costs in both labor and products. The product costs were the result of an effort by Piech while CEO to push the VW brand upmarket.
VW had also negotiated wage agreements with the German labor unions that guaranteed that the workers had to put in only 28.8 hours per week for full pay - the highest wage rates in the industry.
Pischetsrieder wanted Bernhard as his hard-nosed cost cutter - a role Bernhard played for Dieter Zetsche at the Chrysler group - and put him in charge of the Volkswagen brand.
Bernhard committed VW to an aggressive new-model program, promising to launch 20 products over five years.
But he also hammered at costs and angered the automaker's powerful labor union. Bernhard led negotiations with VW's unions that resulted in a plan to cut up to 20,000 jobs through 2009. He pushed to make VW's factories more efficient and cut the rate of defects. When the unions balked, he threatened to move production to plants outside Germany.
But the unions had an ally in Piech. And Piech had already indicated his displeasure with many of the moves that Pischetsrieder had made.
That issue came to a head - and Bernhard's fate was sealed - at a meeting of a supervisory board steering committee last November. In that meeting, Piech, along with the 10 labor representatives that make up half the supervisory board, withdrew their support of Pischetsrieder, even though they had extended his contract for five years the previous April.
Reuters contributed to this report.
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