There has been a big shake- up in the top management structures of two major European motor companies. VW and PSA Peugeot-Citroen are also set to slash 30 000 jobs as part of their strategies to become more competitive in a fairly stagnant market.

One of the key reasons being presented for the restructuring is to enable the companies to better defend their home markets against the growing threat from ambitious Japanese manufacturers. Toyota and Honda have set their sights firmly on increasing their share in the important European market.

The biggest surprise at Volkswagen was the enforced resignation of group chairman Bernd Pischetsrieder only seven months after he had been given a new five-year contract. Pischetsrieder, who worked at BMW South Africa for several years, lost his final battle with Ferdinand Piech, the VW supervisory board chairman and still the most powerful man in the company.

Analysts say the main reason for Pischetsrieder's dismissal was that Piech wants Porsche to have more control of VW, and Pischetsrieder was an obstacle to his strategy. Pischetsrieder joins a list of several distinguished motormen who have lost battles with Piech. These include Franz-Josef Paefgen, who headed Audi between 1997 and 2002, Franz-Josef Kortum, another former Audi chief who only lasted 13 months after taking over this position from Piech in 1993, and Herbert Demel, who followed Kortum as chief of Audi in 1994.

The new man in the VW hot seat (from December 31, 2006) is Martin Winterkorn, the previous Audi chairman.

Third quarter profit of the VW Group (to end September 2005) plunged 92 per cent on the back of huge severance costs and a pension deal associated with the wide-ranging restructuring of the company, which has seen it scale back work hours and trim jobs. So far, 5 000 VW workers have agreed to take "buyouts" while 11 000 will take early retirement. The cost-cutting programme will include the axing of 20 000 jobs in Germany.

PSA Peugeot-Citroen was the other company to make a change at the top. Christian Streiff, the former head of Airbus, was picked to succeed Jean-Martin Folz, who is retiring. The French manufacturer's profits have dropped since 2002 as Folz failed to reduce costs fast enough to counter falling demand for vehicles.

Meanwhile, Porsche is in the spotlight over the possibility of insider trading during its drive to build up its stake in VW. The luxury sports car maker said it planned to increase its stake in VW from 27,4 per cent to 29,9 per cent - just short of the 30 per cent which would require it to launch a takeover bid for VW.