FRANKFURT -- Ferdinand Piech, a towering figure at Volkswagen for more than two decades, resigned as chairman of the company on Saturday after losing a showdown with Chief Executive Martin Winterkorn.
Piech, the 78-year-old grandson of the inventor of the Volkswagen Beetle, had previously succeeded in ousting other executives who crossed him, including his hand-picked successor as Volkswagen CEO, Bernd Pischetsrieder.
But this time, he was unexpectedly isolated in a five-to-one vote of Volkswagen's steering committee last week as labor representatives, the state of Lower Saxony and even his own cousin Wolfgang Porsche stood firmly behind Winterkorn.
"The members of the steering committee came to a consensus that, in the light of the past weeks, the mutual trust necessary for successful cooperation was no longer there," the six-member panel said in a statement after another meeting on Saturday.
"Against this background, Professor Doctor Ferdinand K. Piech resigned from his office as chairman as well as all his supervisory board mandates within the Volkswagen group with immediate effect," the statement said.
"The uncertainty had to be ended today," said Deputy Chairman Berthold Huber, the senior trade unionist who will take over until a new chairman is elected. "The steering committee was and is conscious of its responsibility to Volkswagen and its many thousand staff."
Piech’s term as chairman of VW’s supervisory board was due to expire in April 2017.
Two sources with knowledge of the matter said Piech had resigned without forcing a vote of the committee at its second crisis gathering in 10 days. Piech's second wife, Ursula, a former nanny who joined the supervisory board in 2012, also resigned.
"Piech's departure represents a seismic shift in Volkswagen's power structure, and could foretell drastic changes in how one of the world's largest automakers operates," wrote Karl Brauer, senior analyst at analysis firm Kelley Blue Book.
"VW has kept pace with General Motors and Toyota's growth in recent years, making it a very tight three-way race for the title of largest global automaker, but VW's struggles in markets like the U.S. and Brazil, along with lower profit margins versus GM and Toyota, shows there's still much work to be done."
Volkswagen's biggest shareholder, Porsche SE, backed the carmaker's management after Piech's resignation.
"We have complete faith in the management of Volkswagen and regret the developments of recent days," Porsche SE Chairman Wolfgang Porsche said in a statement.
He added that Porsche SE, which controls 51 percent of Volkswagen's common stock, would continue to live up to its responsibility as a major shareholder of the carmaker.
Roots of crisis
The leadership crisis burst into the open this month when the news weekly Der Spiegel quoted Piech, the patriarch of the family that owns 51 percent of voting rights in VW, as saying he had "distanced" himself from CEO Winterkorn.
The comment came at a time when VW is slashing costs and revamping operations to boost profitability. It has struggled in the United States and posted lower profits at its core auto division.
The supervjsory board’s leadership committee backed Winterkorn on April 17, saying he’s the “best possible” head of the company.
Winterkorn, 67, who has led Volkswagen to record profits and put it within grasp of overtaking Toyota Motor Corp. as the world’s biggest carmaker, appeared at a meeting of the steering committee in Piech’s hometown of Salzburg, Austria, on April 16 to fight for his job.
The six-member body proposed extending Winterkorn’s contract beyond 2016.
The group usually prepares the meetings of VW's 20-person supervisory board, which is comprised of voting-shareholder and labor representatives and has the power to hire and fire executives, in addition to making other major corporate decisions.