BERLIN -- Ferdinand Piech, who resigned as chairman of Volkswagen over the weekend, sowed the seeds of his own demise by reneging on a deal to support CEO Martin Winterkorn and secretly plotting to oust him instead, according to sources close to the VW board.
When news leaked out that Piech had been lobbying family members behind the scenes to install Matthias Mueller, the CEO of Porsche, at the helm of VW, the company's powerful works council and its home state of Lower Saxony -- a top shareholder -- decided they had had enough.
They demanded a meeting of senior board members -- the second emergency VW summit in a little over a week.
"It was one of the straws that broke the camel's back," a source close to one of the VW board's labor representatives, told Reuters, referring to a doomed attempt by Piech to convince fellow family members to dump Winterkorn and install Mueller.
On Saturday, at an airport in Braunschweig, a half hour down the road from VW's imposing Wolfsburg headquarters, Piech was issued an ultimatum: resign or suffer the ignominy of being booted out in a vote of the board.
Neither Piech, Volkswagen nor senior board members would comment on the resignation, which was announced by VW and a committee of board leaders.
Piech's departure represents the end of an era for Volkswagen. For over two decades, the 78-year-old Austrian has ruled VW like his personal fiefdom, summarily ending the careers of executives he'd taken a dislike to and ramming through controversial strategic decisions through sheer force of will.
His shocking ouster ends two weeks of public mudslinging at Volkswagen. But it also leaves a void at the top of Europe's largest carmaker and a host of questions about the future shape of the company.
Most urgent among them is who will replace Piech in the crucial role of chairman.
Winterkorn had long been seen as the natural successor, but can he slide into the post now, in the wake of his damaging battle with Piech?
Union power
Winterkorn has been freed from Piech's attacks but may also find himself more dependent than ever on the unions who saved his career. Berthold Huber, the former head of Germany's influential IG Metall trade union, takes over as acting chairman following Piech's departure.
"Nothing works at VW without the unions -- it's a simple but sad truth. Winterkorn has won this showdown but very likely at the cost of becoming more vulnerable to the influence of labor," said analyst Juergen Pieper of Bankhaus Metzler.
Winterkorn has begun implementing a plan to eliminate $5.44 billion (5 billion euros) a year in costs by 2017 at VW's core passenger-car brand, where profit margins are far below those of top rivals like Toyota Motor Corp.
He is doing so with the cooperation of the unions, adhering to the cumbersome consensual way of doing business that is core to Volkswagen's culture -- but at a cost.
Only 1.5 billion of the 5 billion savings target has been identified. And last summer, Winterkorn was forced to dump consultants at McKinsey, who had been asked to advise on the implementation of cuts, when labor leaders protested.
Other failings for which Piech criticized Winterkorn include the group's ongoing woes in the United States -- where its inability to understand customer needs were underscored by its use of drink holders that were too small for jumbo-sized U.S. cups.
