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Whither Winterkorn? VW feud ends with a cliffhanger

Will VW CEO Winterkorn stay, or will he go? A power struggle at one of the world's biggest car dynasties has the entire industry on edge. The nail-biting continues after an emergency meeting left everyone guessing.

It was a day packed with all the suspense of a thriller movie: two Falcon jets, a secret meeting in Salzburg, a final showdown between the patriarch and his heir-apparent.

Instead, Thursday's crisis meeting of Volkswagen's inner circle ended just as reporters were preparing to write home about a bloodbath. Had Chairman Ferdinand Piëch killed off his own protégé, CEO Martin Winterkorn?

After less than three hours, the meeting was adjourned. The six-member leadership committee and Winterkorn left without saying a word.

The drama began last Friday, when German news magazine Der Spiegel quoted the VW chairman Piëch as saying he was "at a distance to Winterkorn." The comment came as a surprise to everyone, including VW's second-most powerful man, and Piëch's own cousin, Wolfgang Porsche.

Soon, speculation about a power struggle at Europe's largest carmaker began to spread like wildfire. Was Piëch feeling threatened by the very man he had spent all these years shaping in his own image: a ruthless businessman with his eyes set on the throne of Germany's car kingdom?

A twisting road

The story took another unexpected turn, when, less than 48 hours after launching his verbal attack, some of Piëch's most trusted allies began defecting: From the state of Lower Saxony, which holds a 20-percent stake in the company, to Piëch's own family.

"Dr. Piëch's statement reflects his private opinion, which is not aligned…with that of the family," said Porsche, who also chairs the Porsche SE holding company,

which owns a 51-percent stake

in the 12-brand VW group.

By Monday, a throng of supporters had lined up behind Winterkorn.

"We have in Mr. Winterkorn an outstanding industry leader and CEO, who has our full trust," VW Deputy Chairman Berthold Huber, also a former chairman of the powerful IG Metall trade union, told Der Spiegel.

The company's council also refused to withdraw its backing of an extension of the CEO's contract, set to run out end of 2016, according to an unnamed source.

As the dust began to settle, Piëch was left looking increasingly isolated.

Strictly business

But insiders disagree as to the 78-year-old patriarch's motives. Anonymous sources had said that the chairman had grown increasingly unhappy with Winterkorn's performance, particularly for his failure to turn around disappointing sales in the crucial North American market - something he had expressed at several supervisory board meeting over the past five months.

Recent earnings reports may have provided Piëch plenty of ammunition to sustain his attack on Winterkorn - and win over skeptics: VW's first-quarter sales tanked in several key markets. Demand for the group's core brand dropped 1.3 percent, with deliveries down 9.3 percent in the US and 0.6 percent in China. The Russian market bled the most as Volkswagen suffered a 47.2-percent sales cut, amid continuing Western sanctions over Moscow's involvement in the Ukraine crisis.

The saga continues

For now, it remains unclear what the future holds for both Winterkorn and

the Wolfsburg-based car giant.

The six-member group - which apart from Piëch includes Porsche, Huber, VW Works Council head Bern Osterloh and Lower Saxony state premier Stephan Weil - has said it will make an official announcement on Friday.

According to Piëch's own biographer, Wolfgang Fürweger, there's only one likely outcome: The patriarch will come out on top and the Porsche-Piëch dynasty will remain intact.

"What could the Porsche family possibly gain from an internal division - only to protect a high-paid manager?" he asked rhetorically. "At the end of the day, the Porsche-Piëch clan has always prevailed. It's about business, about money."

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