VW boss shown the door

In a shock announcement, Volkswagen has issued a statement that the company's CEO, Bernd Pischetsrieder, will stand down at the end of the year and make way for current Audi boss Martin Winterkorn.

"The presidium of the supervisory board of Volkswagen AG and the chairman of the board of management, Dr Bernd Pischetsrieder, have agreed upon his resignation effective from December 31, 2006," said VW in its blunt statement.

The timing of the announcement is interesting -- to put it mildly -- as just six months ago the supervisory board had unanimously voted to extend Pischetsrieder's contract until April 2012.

The European car-making heavyweight gave no reason for the move, but it is believed that Pischetsrieder's predecessor -- and current supervisory board chairman -- Ferdinand Piech was one of the forces contributing to the former's demise.

Many industry pundits feel that the hard-headed Piech is the bloke who really wears the pants around Volkswagen, and it's believed his nose was put out of joint by rigorous cost cutting initiatives proposed by Pischetsrieder.

Enter Martin Winterkorn, 59, who has for some time been the favourite protege of Piech. In fact, it had been speculated for some time that he would be the man to succeed Pischetsrieder, but none would have predicted the immediacy with which the changing of the guard has taken place.

However, various industry experts quoted in a Reuters report have expressed fears that Winterkorn could become the "long arm" of Piech, who has come in for criticism in the past for poor corporate governance practices.

Winterkorn took over Volkswagen's premium Audi division in 2002 and before that, he managed Piech's pet project: developing the Phaeton, conceived as a competitor to the Mercedes-Benz S-class sedan. In reality, the car has been an expensive flop for Volkswagen.

Be that as it may, Winterkorn's stocks within the VW Group have gained tremendous value as a result of a rejuvenated Audi's excellent sales performance under his stewardship.

Audi is now the No 3 German premium brand behind BMW and Mercedes-Benz and it has raised its sales forecast twice this year and now aims to sell 900,000 units in 2006 and 1.4 million a year by 2015.