Shares of VW fell 1.5 percent to 80.05 euros ($102.10) in Frankfurt trading.
On Tuesday night, Volkswagen said that Chief Executive Bernd Pischetsrieder, 58, who was given a contract extension in May through 2012, would leave the company on Dec. 31. He will be replaced by Martin Winterkorn, the head of VW's luxury car unit Audi AG.
The decision came as VW is cutting up to 20,000 jobs, instituting longer working hours at its German plants and trimming costs _ a difficult program that Pischetsrieder instituted in a bid to compete with Asian automakers and to try and snare a large piece of the U.S. market.
VW's executive committee did not explain the reasons for Pischetsrieder's departure or say whether he would continue in any role at the company.
Some media reports suggested Pischetsrieder's ouster came as part of a push by Porsche AG _ the single largest shareholder in Volkswagen _ to consolidate control over the company.
Porsche AG holds 21.2 percent of VW and signaled last month that it plans to increase that to 25 percent. Porsche has said the stake, large enough to give it blocking power over corporate decisions, was aimed at protecting VW _ a supplier for nearly a third of Porsche's production _ from any hostile foreign takeover.
The business daily Handelsblatt suggested it could have had to do with his role in expanding VW's stake in MAN AG amid the truckmaker's ongoing effort to acquire Swedish rival Scania AB.
In Stockholm, Scania said Pischetsrieder would remain its chairman despite VW's decision.
"Like all other board members, he has a mandate to stay until the next annual general meeting unless he decides differently himself," Scania spokeswoman Cecilia Edstroem told Dow Jones Newswires. The next meeting is in May 2007.
Scania, and its second-largest owner Investor AB both confirmed they had "established contact" with VW and MAN.
Volkswagen is the biggest shareholder in both Scania and MAN, which is mounting a hostile takeover for the Swedish truck maker.
Despite the recent contract renewal, German magazine Focus Online said the decision came after Pischetsrieder decided that the executive committee of VW's board of directors had lost confidence in him.
Analysts were mixed on the move, noting that Winterkorn, who has overseen solid growth and profit at Audi, is more of an engineer than a corporate turnaround specialist.
"Martin Winterkorn has had a successful tenure as CEO of Audi since 2002, lifting the stature of the brand and increasing sales and profits significantly," said Stephen Cheetham, senior European auto research analyst of Sanford Bernstein in London. "But he has been a better engineer than communicator, and it is unclear how he will cope with the highly politicized demands of the VW group CEO role."
But Willi Diez, an analyst with the Institute for Automobile Business in Mainz, said the decision is a signal that VW expects Winterkorn to take his product offensive at Audi and expand it across all of Volkswagen.
The appointment of Winterkorn "is an expression that (the board) wants him to take the company forward on a major product oriented offensive," he told ZDF television.
Pischetsrieder joined VW from BMW, which he left after a dispute over his disastrous 1994 decision to buy Britain's MG Rover Group Ltd.
Winterkorn, 59, joined Audi in 1981 and held various positions at VW before becoming the CEO of Audi, which also includes the SEAT brand, in 2002.
Citigroup Investment Research downgraded Volkswagen to hold from buy after the announcement.
"With Dr. Pischetsrieder's resignation, the restructuring story at VW can't be sustained," it said, but added that the move shouldn't be seen as a launching pad for a Porsche takeover.
Volkswagen said the executive committee of its board of directors recommended Winterkorn take over on Jan. 1. The full board will decide on the move at a meeting on Nov. 17, it said in a statement.
___
On the Net:
http://www.volkswagen.com
