FRANKFURT (Reuters) -- Austrian Hans Dieter Poetsch, Volkswagen Group's finance chief, faces a massive task in his future role as chairman - to maintain the support of the often-divided stakeholders while improving the carmaker's profitability.
Volkswagen Group has grown to become the world's largest carmaker by unit sales in the first half it but it has proven to be one of the most difficult companies to manage as radical reforms can be blocked by labor representatives, who hold half the seats on the supervisory board, and its home state of Lower Saxony, which controls a 20 percent stake in the company.
Poetsch, 64, who has been VW's chief financial officer for 13 years, was chosen as chairman on Thursday because he is seen as a relatively neutral and unthreatening figure.
Unlike some other senior VW engineers, he has avoided becoming seen as too beholden to ousted former chairman Ferdinand Piech or CEO Martin Winterkorn.
Poetsch's gentle demeanor should help him mend fences at VW which has been rocked by the clash between Piech and Winterkorn, but analysts and observers wonder whether a consensus-oriented approach is what VW needs right now.
Ferdinand Dudenhoeffer, professor of automotive industry economics at the University of Duisburg Essen, said Poetsch, a former chief executive of automotive paintshop systems manufacturer Duerr, was a bad choice. "He's nice, approachable. He's good to go out for a drink or a bite to eat with. He's not the type who likes conflict," Dudenhoeffer said. "He's a stop-gap because they couldn't find a strong external candidate."
However, Volkswagen's belief that it makes the best cars in the world is seen as having led it to a German-centric, top-down management approach that has prevented it from developing cars that meet the tastes of Chinese and American consumers.
"Peace is the worst thing that can happen to VW. That means 'keep going in the same direction'," Dudenhoeffer said.
Piech, the departed industrial scion and grandson of Beetle designer Ferdinand Porsche, was no stranger to conflict and radical decisions. For years, he managed the balance of power between powerful labor representatives, senior VW managers and shareholders, sometimes by ousting his own staff, as in the case of former CEO Bernd Pischetsrieder.
Meanwhile, Poetsch worked in the background, ensuring that Volkswagen Group had the financial means to absorb bold acquisitions masterminded by his fellow Austrian, Piech, such as the purchase of truck makers MAN and Scania , sports-car maker Porsche and motorbike maker Ducati.
Now he faces the task of reining in some of VW's bloated operations to boost profits, even if that means making himself unpopular at headquarters by cutting jobs at home.
"He has a clear understanding of the key financial problems the group is facing," said Evercore ISI analyst Arndt Ellinghorst, welcoming the appointment.
After years of chasing growth VW overtook Toyota as the world's largest carmaker earlier this year, delivering 5.04 million vehicles in the January to June period, ahead of Toyota's 5.02 million, but it did so far less efficiently.
In the quarter ended June 30, Toyota had 342,872 employees. In contrast, Volkswagen has 597,800 staff, according to quarterly results.
A former head of group controlling at BMW, Poetsch also has plenty of insight into engineering processes, having studied industrial engineering at the Techical University in Darmstadt before spending his entire career in finance.
Given his focus on the numbers, and his success in integrating Porsche, VW's rival factions threw their backing behind Poetsch to hold the role as chairman, a post which casts the deciding vote on any restructuring decisions.
"His appointment lays the foundations for a trusting relationship between the management and supervisory board," Lower Saxony premier Stephan Weil said in a statement. "The naming of Poetsch is a good decision for Volkswagen and therefore also for Lower Saxony."