Volkswagen backs CEO Martin Winterkorn – but row with chairman Ferdinand Piech rumbles on

Some observers suggested that the statement of confidence in Mr Winterkorn was an unprecedented defeat for Mr Piech

Volkswagen ended a fraught, week-long dispute over the future of its veteran chief executive Martin Winterkorn by declaring that the 67-year-old manager would stay in office – despite earlier objections voiced by VW’s influential chairman, Ferdinand Piech.

The announcement by VW’s key supervisory board came after Mr Piech, 78, who is the patriarch of VW’s founding Porsche family and chairman of the company board, provoked a showdown with Mr Winterkorn by admitting publicly that he had “distanced himself” from the VW CEO.

But in a statement on Friday, the supervisory board insisted that Mr Winterkorn was the “ best possible chairman of the Volkswagen board of management” and that it would recommend that his contract as CEO be extended to beyond its current expiry date at the end of 2016.

Mr Piech’s waning confidence in Mr Winterkorn had been attributed to VWs failure to make significant inroads into the American car market, where its main rival Toyota has succeeded with record sales, particularly in the SUV vehicle range.

Some observers suggested that the statement of confidence in Mr Winterkorn was an unprecedented defeat for Mr Piech – a figure who has played a deciding role in the appointment and dismissal of VW CEOs for more than a decade.

However, car industry insiders said that the supervisory board’s decision was merely intended to calm the waters in the run up to VW’s May shareholders meeting, and that the power struggle would continue behind closed doors.

“The battle is by no means over,” a car industry expert Ferdiand Dudenhotfer, told Der Spiegel yesterday.

The VW supervisory board, which held an extraordinary meeting in Salzburg on Thursday, appeared divided, with Mr Piech’s cousin Wolfgang Porsche backing Mr Winterkorn along with other key board members, including the powerful works council boss Bernd Osterloh, leaving Mr Piech apparently isolated.

Mr Dudenhoffer said that the supervisory board’s statement that it would recommend an extension of Mr Winterkorn’s contract was merely a “goodwill” gesture. “Nothing has been signed. Piech will look at everything very carefully before then,” he insisted.