VW-Porsche merger turns nasty with power struggle

German auto industry insiders say the Porsche chief executive Wendelin Wiedeking may be the first casualty of the fighting triggered by an amalgation of the richest, Porsche, and the biggest, VW, carmakers in Europe.

Union boss Bernd Osterloh, the chairman of the VW works council, has taken against Wiedeking as has Porsche co-owner Ferdinand Piëch. "Insiders say that Piëch is even considering ousting Wiedeking as head of the Porsche unit," said the influential news magazine Der Spiegel. "The new horsepower empire is more like a warzone than a cosy family living room."

The fusion of one of the smallest but greatest car companies with the biggest on the Continent was never going to be easy.

Porsche was seen as the usurper, eager to dis-assemble age-old and lucrative working practices without regard for tradition or people.

Those in the know say the Porsche takeover has been a fight for two differing visions. Piëch, Osterloh and VW chief executive Martin Winterkorn are in the camp which wants steady employment with profits a secondary concern. Wiedeking and the Porsche family want high-end cars, high profit and diminished union power.

That union power is still strong at VW. Attempts to make it more malleable in the past through Viagra, sex parties and lavish trips ended up with the biggest corporate scandal in the company's history and numerous court appearances.

Osterloh is known to loathe Wiedeking and is suspicious of his long-term plans. He calls him a "Napoleon" and has gone so far as to criticise the Porsche acquisition of VW as "a hostile takeover". No doubt Wiedeking's announcement that there would be "no sacred cows" at VW - for this, read age-old union rights are under the threat of change - has prompted the workers' suspicions of his motives.

Even before the European Court of Justice tore down the so-called VW Law which stripped the company from its protectionist state barrier and allowed the Porsche takeover, Wiedeking tore into VW's house agreement with its unions - in particular, IG Metall.

Then he and his friends set up the Porsche holding firm SE in such a way that there are an equal number (three) of VW and Porsche labour representatives on the supervisory board, and set it in stone for 10 years.

Osterloh supported the partnership between VW and Porsche as a way to protect them both against a hedge fund takeover. But it has not turned out the way he expected: VW feels colonised, not incorporated, subjugated, not equal.

Now with management's backs also up, Wiedeking may have a hard time in standing his ground.

The VW conglomerate, with the majority voting rights acquired in the Scania truck group in Sweden earlier this month, is now the world's fourth-biggest carmaker, taking in eight brands - Porsche, SEAT, Skoda, VW, Audi, Lamborghini, Bentley and Bugatti.

But all of this is now headed by the Porsche and Piëch families, which hold all common stock in Porsche and thus control the new empire. And they simply don't get on.

It is now widely acknowledged that Porsche, when it acquired a major stake in VW, did not take people sufficiently into account - from shop-floor to boardroom. According to one member of the VW board, Wiedeking treated VW executives "like schoolboys at board meetings".

Bosses at VW think it is natural that they assume the leadership role. In actuality, the tail - Porsche - is wagging the dog. But for how much longer? If Wiedeking is unable to get along with VW's labour representatives - in essence, they despise him - then he may have to go sooner rather than later.

Piëch has lost faith in him because he questions the viability of the luxury brands of VW, particularly the Phaeton limousine. It may be a magnificently built car but few in the world have been eager to pay over £65,000 for a car with a VW symbol on the front when, for the same money, they could have the three-pointed star of Mercedes. Or, say, a Porsche.

With issues of power and prestige still being hammered out at the new behemoth, VW board members are lining up against Wiedeking. The jury is out on whether or not he will stay, jump or be pushed.