Volkswagen is moving closer to drawing a line under an acrimonious boardroom war. Europe's largest carmaker will let Chief Executive Martin Winterkorn stay on in his current role for the next three years. That rules him out as a potential chairman, but is encouraging for investors.
Winterkorn's new contract is a career setback disguised as a triumph. He survived an attempted ouster by ageing patriarch Ferdinand Piech in April. Now, Winterkorn will probably have to jack in his ambition of succeeding Piech as chairman. He'll be 71 years old by the time his term as chief executive expires in December 2018.
That increases the odds that Volkswagen might hire an independent, external chairman. Besides Winterkorn, there are just no credible internal candidates to fill Piech's shoes. The new person must have petrol in their blood to oversee 12 brands ranging from motorbikes to heavy trucks and ship engines. At the same time, Volkswagen needs the fresh and unbiased look at its scope and structure that only an outsider can provide.
In any case, it will take more than a new chairman to make Volkswagen look like a normal company run in the interest of external shareholders. The Piech-Porsche family has just over 50 per cent of the votes with 32.2 per cent of total outstanding shares. The State of Lower Saxony has a veto right over key decisions. And traditionally, the IG Metall trade union exerts plenty of power in Wolfsburg.
Volkswagen has strong premium brands, a solid balance sheet, cutting-edge technology and economies of scale it could use more effectively. Until now, that has been undermined by flawed governance. It now has a real opportunity to shift up a gear.
