Ducati next in VW's sights

BERLIN, Germany - Ferdinand Piech is expected to receive shareholder backing for a third term as chairman at the annual general meeting on Thursday, April 19, 2012, two days after he turns 75.

If Piech serves out the five-year period, the balding Austrian will become the oldest-ever chairman of a listed German company.

Helmut Becker, a former chief economist at Bayerische Motoren Werke who now runs a consulting business in Munich, told Reuters: "Piech is still the undisputed leader of VW. He has his finger in every pie that VW management bakes."

It was Piech who spearheaded VW's expansion to an eleven-brand entity that makes everything from fuel-efficient city cars to 40-tonne trucks. When he was CEO, VW bought ultra-luxury nameplates Bugatti, Bentley and Lamborghini and integrated the mass-market Seat and Skoda brands.

BUYING SPREE

And the buying spree isn't over yet. VW's luxury division Audi is expected to announce the purchase of motorcycle company Ducati ahead of the AGM. Piech, himself a Ducati owner, has long coveted the Italian company for its expertise in design and light engines.

Buying Ducati raises the VW brand portfolio to twelve, a number that Piech said in 2009 would be the perfect size for the VW group.

But for some analysts, the Ducati deal is a risky sideshow that reinforces the view of Piech as a stubborn leader who is sometimes driven by whims that defy industrial logic and which even his fellow managers don't understand.

One of his most disputed decisions was the development of a flagship sedan called the Phaeton at a cost of more than 1 billion euros to take the VW brand upscale. The Phaeton's lavish plant in Dresden, Germany, operated below capacity for years and the model was withdrawn in the US after it failed to meet sales targets.

FROM LOSS TO PROFIT

A grandson of Ferdinand Porsche, the founder of the sportscar maker who developed the Beetle under a 1934 contract with the Nazis, Piech took the reins at Audi in 1988 before he joined the parent company.

He developed the brand's pioneering Quattro all-wheel drive technology which helped Audi overcome its image as a maker of bland vehicles, paving the way for the Ingolstadt-based manufacturer to rival BMW and Mercedes-Benz for the world's luxury-market crown.

When he became CEO of VW in 1993, the company was losing money, prompting Piech to cut pay and working hours at German plants, and streamline production by sharing parts among models and brands. The steps helped turn a loss of about 1 billion euros into a 2.6 billion-euro profit in 2002 when Piech was elected chairman.

One of Piech's biggest victories may have been turning the tables on Porsche in the sportscar maker's botched takeover of VW in 2009. Piech initially backed the plan, though changed sides as Porsche's financing unraveled, opening the door for VW to acquire 49.9% of the Stuttgart-based company.

Porsche's holding company, controlled by the Porsche and Piech families, holds a majority of VW common stock. VW, in turn, is now aiming to buy the remaining 50.1% of Porsche's automaking business after abandoning a planned merger.

Under Winterkorn's leadership, VW pushed ahead with global expansion, took controlling stakes in Scania and fellow truck maker MAN and is now combining with Porsche. Group profit surged by more than half last year to 11.3 billion euros as vehicle sales rose 14.3% to a record 8.16 million units.

VW surpassed Toyota as the world's second biggest car maker and wants to clinch the top spot, currently held by General Motors, no later than 2018.