FRANKFURT (Bloomberg) -- Volkswagen AG extended CEO Martin Winterkorn's contract by five years as he aims to complete a merger with Porsche SE and surpass Toyota Motor Corp. as the world's biggest carmaker.
The company's supervisory board unanimously backed the executive's appointment through 2016, Volkswagen said in a statement Sunday. Winterkorn, 63, started as CEO on Jan. 1, 2007, and his current contract expires Dec. 31, 2011.
Under Winterkorn, Europe's largest carmaker added Swedish truckmaker Scania AB to its portfolio and is now merging with Porsche. The CEO plans to open a factory in Chattanooga, Tenn., this year as he seeks to beat Toyota in sales and profitability by 2018. VW holds 3.1 percent of the U.S. market, where its sales rose 21 percent through November, almost double the industry's gain.
“Volkswagen seeks continuity at the top of the company so we can concentrate completely on the details of our tasks,” Bernd Osterloh, the supervisory board's deputy chief and head of the carmaker's works council, said in a separate statement. “With Martin Winterkorn we'll continue our successful course.”
VW's preferred shares, which have replaced its common stock on Germany's DAX Index since the Porsche deal, have more than doubled since the beginning of 2007, when Winterkorn took over. The stock gained 86 percent last year, the best performance in the benchmark Index, which added 16 percent.
Sales chief Christian Klingler forecast Dec. 10. that annual deliveries would exceed 7 million vehicles in 2010 for the first time. VW is benefitting from demand for models including the VW brand Golf compact and Audi A7 coupe, as well as booming sales in China, its largest market.
VW is aiming to sell more than 8 million cars by 2012 and 10 million as early as 2015, three years earlier than a 2018 official target, a person with knowledge of the matter said in October.
Nine-month net income jumped fivefold to 3.78 billion euros ($5.1 billion). Toyota said Aug. 4 that it is targeting net income of 340 billion yen ($4.2 billion) for the fiscal year ending in March.
VW said in November that it will invest 51.6 billion euros in the automotive business over the next five years. The expansion plans rely on success in China, where VW is adding factories to double production to 3 million cars within four years.
Winterkorn, who previously headed VW's Audi luxury unit, took the top job from Bernd Pischetsrieder, who was ousted less than a year after receiving a contract extension.
A decision by German supervisory boards on whether to keep their CEOs usually comes about a year before the contract's end. On Sept. 8, Osterloh already told workers at the carmaker's headquarters that Winterkorn would receive a contract extension.
Winterkorn aims for a pretax profit as a percentage of sales of more than 8 percent in 2018. VW's nine-month pretax margin was 5.9 percent. Toyota had a first-quarter margin of 5.4 percent.
Winterkorn has the backing of Lower Saxony, the German state with a 20 percent stake in the carmaker and the power to veto major decisions.
“We support Martin Winterkorn's ambitious goal to make VW No. 1 in the auto market worldwide by 2018,” Prime Minister David McAllister told Bloomberg in a June interview.
Volkswagen paid $2.5 billion for a stake in Suzuki Motor Corp. in January last year to expand in India. Porsche will add a 10th brand to VW marques that include Skoda, Seat, Audi, Lamborghini and Bentley.