Volkswagen AG extended Chief Executive Officer Martin Winterkorn’s contract by five years, giving the executive the time to complete a merger with Porsche SE and surpass Toyota Motor Corp. as the biggest automaker.
VW’s supervisory board unanimously backed the CEO’s appointment through 2016, the Wolfsburg, Germany-based company said Sunday. Winterkorn, 63, took over as CEO on Jan. 1, 2007 and his current contract expires at the end of this year.
Under Winterkorn, Europe’s largest carmaker added Swedish truckmaker Scania AB to its portfolio and is now merging with Porsche, maker of the 911 sports car. The CEO plans to double production capacity in China with two new plants and open a factory in the U.S. this year as he seeks to beat Toyota in sales and profitability by 2018.
“He has the full support of workers,” Bernd Osterloh, the supervisory board’s deputy chief and head of VW’s works council, said in a statement. “Volkswagen is giving continuity at the top of the company so we can fully concentrate on the details of our tasks.”
Martin Winterkorn, chief executive officer of Volkswagen AG, poses next to a Volkswagen Touareg Hybrid automobile during the company’s annual earnings news conference in Wolfsburg, Germany. (Bloomberg)
VW’s preferred shares, which have replaced the common stock on Germany’s DAX Index since the Porsche deal, have more than doubled since the beginning of 2007. The stock gained 86 percent last year, the best performance in the benchmark index, which added 16 percent.
Sales chief Christian Klingler forecast on Dec. 10. that annual deliveries would exceed 7 million vehicles for the first time in 2010. Volkswagen is benefitting from demand for models including the VW brand Golf compact and Audi A7 coupe, as well as booming sales in China, its largest market.
Volkswagen aims to sell more than 8 million cars by 2012 and 10 million as early as 2015, three years earlier than a 2018 official target, a person with knowledge of the matter said in October.
Nine-month net income jumped fivefold to 3.78 billion euros ($5.1 billion). In November, Toyota raised its profit forecast, saying net income may total 350 billion yen ($4.3 billion) for the fiscal year ending in March.
Volkswagen plans to invest 51.6 billion euros in the automotive business over the next five years. The expansion relies on success in China, where VW is adding factories to double production to 3 million cars within four years.
Winterkorn, who previously headed VW’s Audi luxury unit, took the top job from Bernd Pischetsrieder, who was ousted less than a year after receiving a contract extension.
German supervisory boards typically decide whether to keep their CEOs a year before the contract’s end. On Sept. 8, Osterloh told workers at the carmaker’s headquarters that Winterkorn would receive a contract extension.
Winterkorn aims for a pretax profit as a percentage of sales of more than 8 percent in 2018. VW’s nine-month pretax margin was 5.9 percent. Toyota City, Japan-based Toyota had a first-quarter margin of 5.4 percent.
Winterkorn has the backing of Lower Saxony, the German state with a 20 percent stake in the carmaker and the power to veto major decisions.
“We support Martin Winterkorn’s ambitious goal to make VW No. 1 in the auto market worldwide by 2018,” Prime Minister David McAllister told Bloomberg News in a June interview.
Volkswagen paid $2.5 billion for a stake in Suzuki Motor Corp. in January last year to expand in India and is taking over Porsche’s sports-car business, adding a 10th brand to VW marques that include Skoda, Seat and luxury brands Audi, Lamborghini and Bentley.