FRANKFURT, May 12 (Reuters) - Porsche (PSHG_p.DE) and Volkswagen (VOWG.DE) are in merger talks. Below are the key players in the power struggle over who will shape a new car empire:



VW CHAIRMAN FERDINAND PIECH

The 72-year-old engineer is the grandson of Porsche's founder, Ferdinand Porsche, and is a member of the extended family that controls 100 percent of Porsche's voting stock.

Like his grandfather, Piech is an engineer who held senior positions at Volkswagen, Porsche and Audi before becoming VW's chief executive in 1993 and chairman in 2002.

Piech is a master tactician with a record of surprise moves that have given him huge influence at Europe's largest carmaker.

Piech's relationship with the Porsche clan has been rocky but he does not appar to be fazed by the friction.

"My desire for harmony is limited and probably not much different from colleagues in other companies. It's not possible to take a company to the top by focusing on the highest level of harmony," Piech said in his autobiography.

Some of Piech's management tactics include encouraging internal rivalries and keeping staff in the dark about their projects, colleagues have said.

While development chief at Audi, he had different teams work on the aerodynamics of the Audi 100 model, using wind tunnels in Hamburg, Stuttgart and Wolfsburg, Germany, and Turin, Italy, to complete different parts of the project. He had all the test results sent to him at Audi headquarters in Ingolstandt.

"I was in the middle of it all, putting together the pieces of the puzzle," he said in his autobiography.

Piech often relies on influential labour leaders -- who hold half of VW's board seats -- to push through deals. He tries to minimise job cuts, at times overruling his own managers.



PORSCHE CEO WENDELIN WIEDEKING

A favourite of Porsche Chairman Wolfgang Porsche -- Ferdinand Piech's cousin -- Wendelin Wiedeking is the visionary behind the sports car maker's failed takeover of Volkswagen.

Wiedeking, 56, wanted to secure access to key technologies developed by VW and its Audi, Lamborghini and Bugatti units.

However, he alienated VW managers and labour leaders because of his relentless focus on profits and productivity rather than relying on VW's traditional mantra of building the best-in-class vehicle in the hope that profits will follow later.


Under Wiedeking's leadership, Porsche catapulted from near bankruptcy in 1992 into the world's most profitable car maker, with an annual production of around 100,000 vehicles.

He saw similar potential to improve profitability at VW by forcing through efficiency measures he learned from studying Toyota's lean manufacturing techniques.


However, VW's 330,000 employees fear this could lead to job cuts.

Emboldened by the initial success of Porsche's takeover, Wiedeking moved to dismantle the power of VW's German labour representatives by diluting their influence on the board of directors, known as the supervisory board.

Wiedeking, who likes driving Porsche tractors and growing his own potatoes, accused VW of wasting money on unprofitable "vanity projects" such as the development of the 1001-horsepower Bugatti Veyron, a project championed by Piech.



PORSCHE CHAIRMAN WOLFGANG PORSCHE

After backing Wendelin Wiedeking's takeover attempt of VW, Wolfgang Porsche is now trying to defend the Stuttgart-based automaker's autonomy as it struggles to pay down its debt.

Wolfgang Porsche is Piech's cousin and represents the rival faction in the two families that control all of the voting stock in Porsche Automobil Holding SE.

The 66-year-old manager is a traditionalist who keeps the same Stuttgart office in the factory where his grandfather and company founder Ferdinand Porsche also worked.



VW CEO MARTIN WINTERKORN

Ferdinand Piech's loyal lieutenant became chief executive of Volkswagen in 2007 when his predecessor, Bernd Pischetsrieder, ran afoul of the powerful chairman.

In an industry full of forceful personalities, Winterkorn, 61, is a drab figure who has spent practically his entire career at the VW group as a technology expert.

The metallurgist took over VW's premium Audi division in 2002 after serving as head of technical development at VW, where he developed a reputation among analysts for overengineering cars with too much unnecessary content.

Apart from overseeing the design of the VW Golf, the passionate engineer ran Piech's pet project -- developing the VW Phaeton executive saloon -- which ended in as an expensive flop.

The love of technology that Winterkorn shared with his mentor served him better at Audi, where premium car buyers were keen to pay more for the latest in cutting-edge design.

Winterkorn is a soccer fan, who wanted to be goalkeeper for the German national team when he was growing up.



VW WORKS COUNCIL HEAD BERND OSTERLOH

Osterloh became Volkswagen's most powerful labour leader in 2005, when he was named head of the VW Works Council. He is an important force on VW's supervisory board. The labour representatives who sit on the board are generally allied with Ferdinand Piech.



LOWER SAXONY PREMIER CHRISTIAN WULFF

Wulff, 49, is a star in Chancellor Angela Merkel's Christian Democrats party and has been premier of VW's home state of Lower Saxony for six years.

Wulff is a key figure in the Porsche/VW merger talks because he controls the state's blocking minority stake in Volkswagen, giving it veto power over any changes at the carmaker.

The charismatic Wulff has led the campaign to preserve Germany's VW Law, which enshrines the state's role in the carmaker, despite objections from the European Commission that it blocks the free flow of capital. (Reporting by Edward Taylor, Christiaan Hetzner and Michael Shields; editing by Karen Foster)

Volkswagen’s chairman issued a clear signal that the volume carmaker was in the driving seat of its proposed merger with Porsche as Germany’s financial watchdog launched another market manipulation probe against the sports car maker.

Ferdinand Piëch, VW chairman, said it had been decided that the headquarters of the combined group – which he proposed be named Auto Union after the carmaker created by the merger of several brands during the Great Depression – would be in Wolfsburg, where VW is based.

Mr Piëch, the grandson of Ferdinand Porsche, designer of the VW beetle, added that his idea of a takeover of Porsche’s sports car business by Volkswagen was not off the table. He said it was the simplest way to integrate the sports carmaker as VW’s tenth marque.

He also prompted fresh doubts about the future of Porsche’s management when he said he favoured Martin Winterkorn, chief executive at VW, as the head of the new group. He said it was unlikely that Wendelin Wiedeking, Porsche’s headstrong chief executive, would be happy to stay on in a more “lowly” role.

Similar words have been used by Mr Piëch in the past to mark the end of VW managers’ careers.

Porsche declined to comment.

Bafin, the regulator, launched its second market manipulation probe in seven months after a German press report alleged that Porsche had informed Lower Saxony in February 2008 about its intentions to lift its stake in Europe’s largest carmaker to 75 per cent. The report, which was denied by the state of Lower Saxony yesterday, said this move came long before Porsche had made these plans public.

Porsche has always denied such allegations.