Martin Winterkorn will stay on as chief executive of Volkswagen, the German carmaker said today, in an unprecedented defeat for its powerful chairman, Ferdinand Piech.
Piech, the patriarch of Volkswagen's founding family, had provoked a showdown with Winterkorn by planting a comment in weekly magazine Der Spiegel last week that he had "distanced himself" from his CEO.
A top VW committee met in Salzburg yesterday to try to resolve the row and gave Winterkorn its full backing.
"The executive committee places great importance on the fact that Martin Winterkorn will pursue his role with the same vigor and success as before, and that he has the full support of the Committee in doing so," VW said.
The six-member panel also said it would propose extending Winterkorn's contract beyond its December 2016 expiry date at a board meeting next February.
VW shares rose over 2% on the news before paring gains to trade marginally higher.
Piech, the 78-year-old grandson of VW Beetle inventor Ferdinand Porsche, has a history of ending the careers of top executives with similar remarks planted in the media.
But this time the powerful works council chairman Bernd Osterloh, a member of the executive committee, stuck by Winterkorn, who has included labour representatives in the planning of vast cost cuts rather than excluding them.
"Martin Winterkorn is one of the most capable managers in the auto industry," Audi works council chief Peter Mosch who sits on the VW board told Reuters.
"As chief executive of Audi and later VW, he has played a considerable role in the success of the VW group," he added.
Meanwhile, Volkswagen said it sold 2.5 million cars across its multi-brand group in the first-quarter of 2015, an increase of 1.8% over last year's period, the carmaker said today.
The company said it experienced positive momentum in Western Europe. But markets in Central and Eastern Europe and in South America remained difficult.
In March, group sales gained 2.3% to 968,300 cars, Volkswagen said.
