VW boss fights for survival in latest bout of tension at top

Bernd Pischetsrieder, chief executive of Volkswagen, Europe's largest carmaker, comes out fighting for his job tomorrow against a brutal campaign by his chairman, Ferdinand Piech, to unseat him.

Mr Piech, who chose Mr Pischetsrieder as his successor, began an open power struggle within VW last week by publicly questioning whether the former BMW director deserved to have his contract extended for another five years.

A past master at running the group with the support of the unions, the chairman said: "I know no company in Germany where anybody can survive with 10 votes of the workers against him." Worker representatives have equal weight with shareholders on the VW supervisory board, giving Mr Piech a casting vote as chairman.

Mr Pischetsrieder, who presents VW's 2005 results in Wolfsburg, Lower Saxony, tomorrow has indicated he will fight the moves to replace him with Martin Winterkorn, head of Audi, VW's premium brand, or Wendelin Wiedeking, head of Porsche, VW's biggest shareholder.

"The question whether Winterkorn takes over from me will stay with us both until we're 65," the 58-year-old told Der Spiegel magazine. He is seeking a five-year extension of his contract, which runs out in 2007, at May's annual meeting. Mr Winterkorn, also 58, has refused to comment.

The war at the top is the latest in a series of crises and scandals at VW which has witnessed heavy losses at its core Volkswagen brand and the resignation of senior managers and union leaders over allegations of bribery, corruption, fiddled expenses and paid-for sex.

The group, in the throes of a cost-cutting programme that helped operating profits last year leap 70% to €2.8bn (£1.9bn), is in talks with the unions to axe 20,000 jobs amid threats of plant closures or sell-offs in Germany. VW signed a deal with the unions in late 2004 guaranteeing the 103,000 jobs in the domestic workforce until 2011 in return for longer hours and pay cuts in real terms. But, for the unions, whose members earn 20% more than the German industrial average, the threatened job losses and closures or sell-offs are the last straw.

Mr Piech, a scion of the Porsche family which controls 21.3% of VW's equity and has plans to raise this to 29.9%, has summoned a special supervisory board meeting for April 19 to debate VW's strategy and Mr Pischetsrieder's fate.

The Austrian aristocrat, grandson of Ferdy Porsche, architect of the VW Beetle, is enraged by Mr Pischetsrieder's plans to restructure VW, freeze him out and, most of all it is said, by his decision to stop selling the luxury Phaeton, VW's answer to Rolls-Royce and his baby, in the US.