Wiedeking's future is in the balance

Porsche's plan to merge with Volkswagen has intensifed a power struggle that could see the spectacular fall of the sports car maker's CEO Wendelin Wiedeking.

The German press says that Wiedeking faces his Götterdämmerung after his plan for Porsche to take control of Volkswagen, a company 15 times Porsche's size, was abandoned.

Laden with debts of 9 billion euros ($11.99 billion) from its acquisition of 51 percent of VW shares, Porsche Automobil Holding on Wednesday halted its original plan to seize control of VW, which is Europe's largest automaker, by raising its stake to 75 percent.

Instead the Porsche-Piech clan, which controls Porsche, wants to merge their Stuttgart-based sports car business with VW under a new holding company. Porsche would become the 10th brand in VW group alongside units such as Scania trucks, Skoda, Seat, Bentley and Lamborghini.

Winterkorn favorite

It's not clear who will run the new company. German press reports say VW group CEO Martin Winterkorn, 62, is favorite because Wiedeking has made too many enemies with his outspoken attacks on the way VW is run.

“Wiedeking has broken too much china,” said Stefan Bratzel, head of the Centre of Automotive Research at the University of Applied Sciences in Bergish-Gladbach, Germany.

Winterkorn also is a protege of VW Chairman Ferdinand Piech, who wants Wiedeking and Porsche's Chief Finance Officer Holger Haerter to be fired for amassing huge debts at Porsche, according to German media reports.

Wiedeking admits that a merger with VW is not what he hoped for. “It's not a marriage made in heaven, more a marriage of convenience,” Wiedeking told Porsche's 3,000 employees in Stuttgart on Thursday.

When Porsche first began building up its stake in VW in 2005, Wiedeking upset Wolfsburg's powerful trade unions by calling for “sacred cows” to be slaughtered.

He challenged VW's labor agreement that pays the company's German workers above the industry average and called for the abolition of the so-called VW Law. The law gives the north German state of Lower Saxony where VW is based a blocking minority on strategic decisions because it has a 20 percent stake in VW.

Wiedeking also upset Piech by criticizing as cars, which the VW patriarch had championed, such as the Bugatti Veyron and VW Phaeton.

Until the extent of Porsche's debts became clear in recent weeks, Wiedeking, 56, had seemed untouchable.

He was praised as one of the auto industry's brightest stars after turning Porsche from a bankruptcy candidate into the world's most profitable carmaker. His salary of 80 million euros last year made him Germany's highest paid boss.

Wiedeking loses key ally

Now some of Wiedeking's staunchest supporters are distancing themselves from him.

Porsche's labor boss Uwe Hueck was previously a key ally of Wiedeking's in challenging VW's trade union leaders and the VW Law. Hueck now says he wants a similar law at Porsche to protect its workers..

“I am concentrating on the workforce, the bosses are secondary,” Hueck said.

Porsche's workers are disillusioned. “Porsche is finished. We're VW now,” one worker told reporters at the factory gates.

Lower Saxony and VW labor leaders have threatened to block a VW-Porsche merger unless they win key concessions.

Lower Saxony Premier Christian Wulff insisted on maintaining the state's blocking minority stake, two seats on the supervisory board, and a veto on plant closures. He added that a merger was by no means a done deal.

VW's employee leaders said labor should continue to have a major say in how the new company is run.

Porsche will struggle to dictate terms of how the new company will look, analysts and bankers close to the deal say.

"Volkswagen and Lower Saxony are now in the driver's seat," Credit Suisse analyst Arndt Ellinghorst said on Thursday. "Porsche needs VW's cash, and VW doesn't need Porsche's debt."

Baby Audi’s a Mini marvel

Ultra-efficient city car takes firm into new territory – and could be the true spiritual successor to the Mini!

IT’s the all-new Audi that claims to pick up where the original Mini left off! This is the E1 – an ultra-efficient city car from the German firm and a model which is being hailed as a spiritual successor to Alec Issigonis’ masterpiece.

Sharing its platform with VW’s forthcoming up!, the newcomer takes Audi firmly into new territory. It’s designed to sit below the Polo-based A1 – due next year – as the entry point into its model line-up, and is aimed at the likes of the new Fiat Topolino and MINI Spirit (revealed in Issue 1,056). Signifying the launch of a new wave of hi-tech Audis, the E1 goes on sale in 2011 and will be the first car from the company to wear the ‘E’ tag.

It will be closely followed by a full range of E-badged models over the next five years. And with a hybrid version of the A1 due shortly after the standard supermini’s 2010 launch, Audi is clearly readying itself for an assault on the eco-friendly small-car market.

However, despite its diminutive size, the E1 will remain a premium product that fits in with the brand. Although its proportions are reminiscent of those of the VW up!, the familiar mesh-styled grille, short overhangs and huge front badge make the electric three-door instantly recognisable as an Audi. Futuristic front and rear LED light clusters, large alloys and a sharply rising waistline that meets a neatly kicked-up C-pillar complete the E1’s look.

Inside, buyers can anticipate more of the same, with a cabin that boasts the usual premium levels of material quality but with a more creative design. As previewed on the A1, the E1 will get a development of Audi’s new mobile device – essentially a hand-held portable sat-nav, phone and MP3 player with touchscreen display. The gadget replaces the key and plugs into the centre console.

The E1 will be packaged similarly to Toyota’s iQ, which means customers can expect a 2+1 layout with plenty of room up front and enough space in the back for luggage or one small passenger.

A variety of engines will be offered, although the star of the show will be an electric powerplant. It incorporates lightweight lithium-polymer batteries and a punchy electric motor driving the front wheels.

So the small, agile car will be ideal for city motoring, delivering 0-60mph in around 10 seconds. And with a full charge providing enough energy to travel up to 100 miles helped by regenerative braking, the plug-in machine will have real all-round ability.

In addition to the electric variant, there will be petrol and diesel versions, using new 600cc two-cylinder turbo units. These will aim to offer sub-100g/km CO2 emissions and economy of 94mpg. A 1.2-litre three-cylinder petrol is under consideration, too.

The E1 will be built at VW’s plant in Bratislava, Slovakia, alongside the up! as well as Skoda and SEAT variants. Audi’s version will carry a price tag of around £12,000, which will pitch it against rivals such as Smart’s electric ForTwo and Fiat’s forthcoming hybrid 500.

The electric E1 will be eligible for a Government grant worth up to £5,000 which will be made available to all buyers of electric cars and hybrids from 2011.

Bugatti Veyron Centenaire

New special edition Veyrons influenced by classic Bugatti Type 35 grand prix car

A special edition car is normally the sign of a model at the end of its life, manufacturers clamouring to sell the last few before ushering in a replacement. Not so for Bugatti. It has announced another four unique Veyrons, following on from numerous other special editions and limited colour combinations.

The Veyron Centenaire comes in four different flavours, the full set being revealed at the Concorso d’Eleganza supercar and classic show at Italy’s Lake Como. Each is a one-off, too, making this the rarest of special Veyrons, although it wouldn’t be a surprise if all four fall into the hands of existing Veyron owners.

The less than subtle colour scheme is a mix of garish polished aluminium and one of four hues from Bugatti’s classic Type 35 grand prix car. The latter is perhaps the brand’s defining moment, and its grille and wheels have had subtle influences on the Veyron’s design.

As well as being matched to a particular Type 35, each Veyron Centenaire also represents a driver from Bugatti’s illustrious racing past (2000 wins in ten years). As such, the cars bear the racing colours of each driver’s country as well as having their signature stitched into the headrests.

If you want to be patriotic, pick the green car, which represents England and Sir Malcolm Campbell. You also have the choice of red (Achille Varzi and Italy), blue (Jean-Pierre Wimille and France) and white (Hermann zu Leiningen and Germany).

As you may have guessed from the name, the Veyron Centenaire is celebrating 100 years of Bugatti. There’s more partying to come, too, with the next event at California’s Concours at Pebble Beach on August 16. More special editions? You wouldn’t bet against it…