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Porsche-Piech clan still backs VW’s brand chief

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Porsche-Piech clan still backs VW’s brand chief

Porsche-Piech clan still backs VW’s brand chief

Despite his recurring clashes with labor leaders, Volkswagen Group’s brand chief, Herbert Diess, still has the support of the Porsche-Piech clan, the clan that controls the automakers, Automotive News reported sources said.

Diess, the 58-year old engineer, continues to clash with labor leaders over the issue of cost-cutting plans, Automotive News reported sources said.

Earlier this month, VW’s labor bosses had accused Diess of breaking promises made in November. The labor bosses said Diess halted cooperation with brand management on issues including overtime work, apprenticeships and cost savings.

The automaker is pressed to cut spending to fund their costly plan to shift to electric cars and new mobility services. Meanwhile, the company is still dealing with billions of euros in costs for its emissions test cheating scandal.

Diess was also known as a cost-cutter while he worked at BMW. Since joining VW in July 2015, he has repeatedly clashed with VW works council chief Bernd Osterloh over where to cut to make the savings.

The Porsche and Piech families took control of much of VW’s common stock through a family-owned holding company Porsche SE. They continue to stand behind Diess despite the quarrelling, two people familiar with the situation told Reuters.

VW declined to comment on the matter.

The two families, Porsche and Piech, were instrumental in choosing VW’s former finance chief Hans Dieter Poetsch to become supervisory board chairman after the emissions scandal broke out. They were also instrumental in choosing the former Porsche boss Matthia Mueller to become VW Group CEO.

Analysts have said that VW’s ability to overhaul its mass-market brand will be the key to its recovery from the scandal. They have also advised Diess to stand firm on structural changes, despite resistance from unions.

The supervisory board is expected to meet on Friday afternoon to discuss the financial results of VW for 2016 and the new compensation guidelines for the top executives.

VW emissions scandal broke out in September 2015. The company has reportedly set aside $18 billion to cover the cost of the scandal, according to a report from the NY Times. The automaker said it lost $6.2 billion in 2015, compared with a profit of $2.6 billion in 2014.

The scandal broke out when the Environmental Protection Agency (EPA) issued a notice of violation of the Clean Air Act to the automaker. It was found that the automaker had been using intentionally programmed systems to activate certain emissions controls only during the laboratory testing of their vehicles.

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