Ulrich Hocker, director of the German SdK Small Shareholders Association, says the EU and investors will eventually pressure Volkswagen to become friendlier to shareholders. Hocker noted that when Volkswagen forecast record earnings this year on June 7, its share price barely budged, rising less than 1 percent.
``Even good news doesn't give the shares any traction,'' says Hocker, whose association's membership doubled in five years.
Profits, not investor politics, are foremost on Piech's agenda at the moment. Through May from a year earlier, European auto sales were down 3.3 percent, and in the US -- Volkswagen's largest foreign market -- they were down 5.9 percent. Production cuts caused by power shortages in Brazil aren't helping.
Piech is trying to offset such problems with cost cuts worth DM1 billion to DM2 billion (US$448 million to US$897 million) this year.
He's negotiating with unions for longer working hours and may reorganize production under three groups: luxury cars, mass-market cars and sport-utility vehicles.
He plans to push the company upscale in the next five years with 67 new models, including some of the most expensive cars in Volkswagen's history. For 2002, he plans a 500-horsepower sedan aimed at the S-Class sedan from DaimlerChrysler's Mercedes unit. For 2003, he plans a US$1 million, 1,001-horsepower supercar from Bugatti.
He's also seeking acquisitions or alliances with heavy-truck makers. Last year, he spent US$1.28 billion for an 18.7 percent share in Scania AB, Europe's third-largest truck maker. He was also named Scania's chairman.
Volkswagen opened an investor relations office in London last year. Since then, its executives have met with analysts and investors more regularly.
"We have changed our attitude in terms of investor relations," Jens Neumann, a member of the management board, said in January at the Detroit Auto Show.
Not all investors are impressed. "Volkswagen's shareholder policies are impossible," says Heino Drieling, a Volkswagen shareholder who's now retired after working in the company's finance department from 1965 to 1971.
"The company doesn't care about shareholders because it doesn't have to. The only ones who count are the state of Lower Saxony, the unions and the Social Democratic Party." Change may come more quickly if Bernd Pischetsrieder, chief executive of BMW from 1993 to 1999, succeeds Piech as Volkswagen chief executive next spring when Piech retires.
Piech hired Pischetsrieder, 53, to run Seat last year.
"At BMW, Pischetsrieder was more open with investors than Piech has been at Volkswagen. He tried harder to explain his strategy," says Arndt Ellinghorst, the WestLB analyst.
Still, Piech will retain considerable clout after retiring. He'll likely serve as chairman of Volkswagen's supervisory board, which hires and fires senior executives, and will remain chairman of Scania.
That may mean that Volkswagen will still be a leader in finding out what customers want and giving it to them. It could also mean that the company will continue to be far less sensitive to investors' needs.
RSS