Family feud

Two days ago 67-year old Democrat Hillary Clinton declared that she was running for President of the United States. Today 43-year old Mark Rubio announced his candidacy while 62-year old Jeb Bush is considered the front-runner for the Republican candidacy for the 2016 run for Presidency.

It wouldn’t be a big surprise if a 67-year old CEO of a company said they were retiring. According to a statistical Snapshot of leading CEOs by Spencer Stuart the average age of a CEO is 56 years old.

Is Piech distancing himself from Winterkorn because of poor return-on-investment, lack of a global super cheap car and the US market not doing well? Or is it because Piech wants younger blood with new ideas at the helm?

Winterkorn would be 69 years old if he were to become the Chairman of Volkswagen AG as most people thought he would. How soon after he became Chairman would people talk about who was going to replace him?

Volkswagen has an advisory retirement age of 62 years old. Age is not the deciding factor it once was in whether someone can do the job effectively. Both Volkswagen AG’s 67-year old Chief Executive Martin Winterkorn and the 77-year young chairman of the supervisory board of Volkswagen Group, Ferdinand Piech have proven that retiring at the age of 62 is antiquated.

Both men have proven themselves but are the executives underneath them willing to wait? Could the problem be that in order for Winterkorn to take Piech’s place Volkswagen may lose a couple of key executives that are younger?

If it is not Winterkorn’s age that has Piech saying he is distancing himself from his CEO what is it?

Results

There are three groups that own the majority of Volkswagen AG; Porsche Automobile Holding SE (Porsche and Piech families), 50.73%, State of Lower Saxony, 20%, Qatar Holding, 17%, Others, 12.3%. Ferdinand Piech is chairman of the board and his cousin, Wolfgang Porsche is on the supervisory board of VW AG.

The VW AG group sells passenger cars under eight brand names, one motorcycle marques, and three commercial vehicle nameplates.

Volkswagen was close to overtaking Toyota 3 years ahead of schedule. Volkswagen is not the profit-maker Porsche, and Audi is, but that is normal. Luxury vehicles traditionally makeup ten percent of the sales of a group, but add fifty percent of the profits.

Reuters reported that “under Winterkorn’s watch, VW has expanded from eight to twelve brands, more than doubled the number of production plants to over 100 and boosted sales 64 percent to a record 10.1 million vehicles last year.”

Volkswagen USA sales are lackluster. There have been some starts and stops in the last decade that have created that paradigm. It takes some time to rebuild reliability when a company has lost the trust of people because of missteps. But Volkswagen AG has been working with Volkswagen USA to bring it’s reliability numbers up and to bring some European vehicles to America quicker.

Winterkorn had to be concerned that this would happen to him. Piech has withdrawn support before. In 2006 then-CEO Bernd Pischetsrieder resigned, and Winterkorn succeded Pischetrsrieder into CEO power at the behest of Piech. Other executives have quit Volkswagen after being publicly chastised by Piech.

Synonymous with the last year of a Presidency, Piech will start looking at what and how he wants to leave his legacy of reign. If there is a chance Volkswagen AG could lose some of it’s younger key executives than Piech needs to say that is the reason he is making changes in what appeared to be the heir apparent.

Winterkorn is vowing to fight and has the backing of Lower Saxony and the labor unions. With a year left before the decisions are made Winterkorn has time to work with the powers that be and the executives below him to show that he has the automotive and business acumen that Piech has and will stay loyal to his team.