FRANKFURT -- Volkswagen Group plans to extend the contract of CEO Martin Winterkorn until the end of 2018, a victory for the executive after he clashed with former Chairman Ferdinand Piech.
VW today said its supervisory board's executive committee had proposed extending Winterkorn's contract. The 20-member supervisory board is now expected to formally vote to approve Winterkorn's contract extension on Sept. 25.
Winterkorn is revamping Volkswagen's corporate structure into a decentralized system with four holding companies in a bid to boost profits at the carmaker, three VW sources told Reuters in June.
VW Group's 12 brands include Porsche, Audi, Lamborghini and Bentley, along with the core VW brand and the Skoda and Seat marques.
VW is still looking for a permanent successor to Piech after installing former union boss Berthold Huber as interim chairman while it looks for a more permanent candidate. Piech resigned from the post earlier this year amid disagreements over VW's strategy and direction.
With Winterkorn “at the helm, we will continue on our successful path of recent years,” Huber said in a statement.
Winterkorn's contract was due to expire in 2016.
Market analysts Evercore ISI said Winterkorn retention of the CEO role likely meant that he will not become chairman because he will be 71 in 2018 and too old.
"This increases the chances for an external chairman, which is good news in our view," Evercore ISI's global research head, Arndt Ellinghorst, said in an emailed statement. Former Ford Motor and BMW executive Wolfgang Reitzle, who is currently Continental's chairman, has been touted as a candidate.
The new VW brand CEO Herbert Diess will be able to turn around the group's biggest brand with backing from Winterkorn, Ellinghorst said.
Potential candidates to succeed Winterkorn as group CEO also now have two to three years to prove themselves, he added.
Eventual candidates for the CEO position include Diess; Rupert Stadler, who runs Audi; and group Chief Financial Officer Hans Dieter Poetsch. Porsche-brand CEO Matthias Mueller, 62, who has been touted as a potential successor, will be too old for the VW top job by 2018, Ellinghorst said.
The issue of who will become chairman will likely be resolved this year, a spokesman for Lower Saxony said on Wednesday. Lower Saxony has a 20 percent stake in VW and state premier Stefan Weil sits on the supervisory board.
Under Winterkorn’s leadership, VW is closing in on Toyota Motor as the world’s biggest automaker, with the German manufacturer overtaking its Japanese competitor in sales in the first half. VW’s six-month sales amounted to 5.04 million cars and trucks, exceeding Toyota’s 5.02 million deliveries. VW has a goal of becoming the No. 1 carmaker by 2018.
Bloomberg and Reuters contributed to this report