HAMBURG -- Volkswagen Group's embattled VW brand chief Herbert Diess still has the backing of the clan that controls the carmaker, despite his recurring clashes with labor leaders over cost-cutting plans, sources said.
Volkswagen's labor bosses earlier this month had accused Diess of breaking promises made under a turnaround plan agreed in November and halted cooperation with brand management on issues including overtime work, cost savings and apprenticeships.
VW is hard pressed to cut spending to fund a costly shift to electric cars and new mobility services while grappling with billions of euros in costs for its emissions test cheating scandal.
But Diess, who was known as a cost-cutter when he worked at BMW, has repeatedly clashed with VW works council chief Bernd Osterloh since he joined VW in July 2015 over where to make those savings.
The Porsche and Piech families, which control a majority of VW common stock through the family-owned holding company Porsche SE, stand behind the 58-year-old engineer despite the quarrelling, two people familiar with the matter told Reuters on Friday.
VW declined to comment.
Analysts have said VW's ability to overhaul its mass-market brand, the group's largest by sales, will be key to the company's recovery from the diesel scandal and have urged Diess to stand firm on structural changes despite resistance from unions.
The Porsche and Piech families were instrumental in choosing VW's former finance chief Hans Dieter Poetsch to become supervisory board chairman after the emissions scandal broke in September 2015, and likewise in picking former Porsche boss Matthias Mueller to become VW Group CEO.
VW's supervisory board is expected to meet on Friday afternoon to discuss the carmaker's 2016 financial results and new compensation guidelines for top executives.