Volkswagen Crisis Gone But Not Gone

The presence of Ferdinand Piëch, VW's major shareholder, hovered over the automaker's annual stockholder meeting on Tuesday, even if the 78-year-old didn't attend. His ex-colleagues and rivals sung Mr. Piëch's praises - unsure what the spurned leader has next up his sleeve.
Volkswagen patriarch Ferdinand Piëch being drive away.

Louise Kiesling and Julia Kuhn-Piëch were the stars of the annual Volkswagen shareholders meeting in Hanover on Tuesday.

Their presence highlighted just how tied-up Volkswagen still is with the family that founded the company. The two women replace their uncle Ferdinand Piëch and his wife Ursula on the company's non-executive board. Mr. and Mrs. Piëch stepped down from the board, referred to as the supervisory board in Germany, after losing a bitter public battle over the future of Volkswagen Chief Executive Martin Winterkorn.

Mr. Piëch is not too thrilled at their appointment. He believes that the two women are poorly suited to serve on the supervisory board of a group with annual revenues of €202 billion ($227 billion). But he is powerless to stop them.

As they arrived at the meeting, Ms. Kiesling and Ms. Kuhn-Piëch faced a flurry of flashing cameras. While the 57-year-old Ms. Kiesling delved into a conversation with SEB Bank Chief Executive Annika Falkengren, who was sitting next to her, the 34-year-old Ms. Kuhn-Piëch smiled into the cameras. Her father Hans Michel Piëch, Ferdinand's brother, also sits on the board. He smiled too, but made no comment about his brother's absence.

The spirit of Ferdinand Piëch hovered over the whole meeting.

Before the shareholders' meeting began, Hans Michel Piëch, Wolfgang Porsche and Mr. Winterkorn toured the group's exhibition of its 12 brands, a traditional tour that has always been focused on Ferdinand Piëch in the past. That was when his word still carried some weight, and now he is not even present in Hanover.

"The chief executive needs to be at the wheel," Stephan Weil, governor of the state of Lower Saxony, said during the tour, when a photographer asked Mr. Winterkorn to sit in a Passat. The remark drew wry smiles from Mr. Porsche and Hans Michel Piëch.

Volkswagen is keen to prove that it was pushing ahead with strategy after the recent turmoil.

While the four men were touring the auto show, Berthold Huber was already sitting in his seat. The former head of the IG Metall metalworkers' union had replaced Ferdinand Piëch as chair of the shareholders' meeting.

It was a rare event for a labor leader to be playing the role, but Mr. Huber mastered it brilliantly. The assembled shareholders applauded, but only briefly, when he thanked his predecessor for his hard work.

Volkswagen currently faces serious problems. The core brand VW's profit margin remains slim and its U.S. business is faltering. But these concerns hardly played a role in the shareholders' remarks. The dispute triggered by Mr. Piëch prompted shareholders to close ranks behind Mr. Winterkorn. In the convention center, with its gray interior, there was no sense of discontent among the roughly 3,000 stockholders in attendance.

Mr. Winterkorn paid tribute to Mr. Piëch in his speech, saying he had been a driving force in the automobile industry in the last five decades, and that he had great respect for his lifetime achievements. The audience seemed to appreciate his conciliatory tone.

Mr. Piëch's reaction remains to be seen. He hasn't decided yet whether he will file objections to any resolutions adopted by the shareholders' meeting. He could also decide to sell his shares, which would sever his relationship with other family members once and for all.

Akbar al Baker, the new representative of the Emirate of Qatar, also received applause. "Volkswagen is already the world's largest automaker and enjoys the greatest respect everywhere," said the 54-year-old. It was what shareholders wanted to hear, but it also revealed what truly motivated the emirate in its investment with Volkswagen. "My congratulations for the excellent price performance since 2009." That was the year his country first invested in VW, and its investment has since quintupled.

Quelle: Bloomberg
The new faces. Julia Kuhn-Piëch, left, and Louise Kiesling.

 

Of course, there was also criticism of the dispute of recent weeks. Ulrich Hocker, president of the German Society for the Protection of Securities Holders, SdK, called it "terribly unprofessional," noting "a war was launched here with six words." Hans Georg Martius of SdK said: "I would have preferred it if they had worked out their differences in private rather than in the media."

Ms. Kiesling, the daughter of Ferdinand Piëch's deceased sister, Louise Daxer-Piëch, was more restrained in her speech, saying: "I have been working in the design field for more than 25 years, and I am looking forward to the chance to contribute this knowledge to Volkswagen in the future."

Ms. Kuhn-Piëch, an attorney, drew attention to the fact that she is already a member of the supervisory board of Volkswagen's subsidiary MAN Truck & Bus. "My new task on the Volkswagen supervisory board is another challenge," she added.

The truck business is at the forefront of Volkswagen's new strategy. The company is keen to prove that it was pushing ahead with strategy after the recent turmoil, outlining ambitious plans for its truck businesses Scania and MAN, two of Europe's largest truck manufacturers. The company has invested billions in the two truckmakers in the last decade but without a clear goal.

In its meeting on Monday evening, the supervisory board paved the wave for the establishment of a parent company that would include Scania, MAN and Volkswagen’s South American truck business. This will create a large structure with close to €30 billion in sales and about 90,000 employees. It excludes MAN's machine-building division, which makes diesel engines for ships, power plants, turbo pumps and transmissions.

Observers had feared that the reorganization of the truck business could be delayed after Mr. Piëch's resignation, as he had pushed for the acquisition of MAN and Scania, but one industry source said Mr. Winterkorn fully supported the project.

The manager of the new venture is Andreas Renschler, who was lured away from Daimler specifically for this purpose. The 57-year-old had brought together Daimler's truck brands Mercedes, Fuso and Freightliner, securing the company's dominant position in the world of trucks. He is expected to repeat the feat at Volkswagen.

The move is admirable, but raises the specter of yet more board conflict at Volkswagen. The truckmakers now have almost as much say within the group as the main car brand Audi.

Mr. Renchler has already run into opposition. The labor representatives for MAN and Scania fear that a new Volkswagen-controlled holding company will curtail their rights. They have a point: the supervisory boards of MAN and Scania will become less important if decisions are made in a higher-level parent company.

The executives of the car brands are also unhappy at the way Volkswagen requires them to meet regularly with MAN and Scania representatives to discuss model design. There are fundamental differences in the selling points for cars and trucks. While Audi and Volkswagen aim to win over customers with appealing design, trucks focus more on fuel consumption, reliability and efficiency. The truck makers for their part were bored in the car-dominated meetings.

But with Volkswagen’s new strategy, all sides must find a way to work together, somehow.

 

 Christian Schnell is an editor with Handelsblatt, covering the German auto industry. Martin Murphy specializes in the automotive and steel industries. Markus Fasse focuses on aviation and automobile industry news. Lukas Bay also contributed to this report. To contact the authors: [email protected], [email protected], [email protected]