A divisive boardroom power struggle at Volkswagen that threatened to delay crucial restructuring efforts at Europe’s largest carmaker eased as its two biggest investors ended a row. The deal announced by Porsche and the German state of Lower Saxony puts the sports car maker’s CEO on VW’s supervisory board while strengthening the hand of embattled VW chief executive Bernd Pischetsrieder and providing for a more independent chairman to oversee VW in the future.

Wendelin Wiedeking, chief executive, Porsche, will also be appointed to the VW board’s powerful steering committee, the praesidium, and will be joined on the board in May 2006 by his finance chief, Holger Haerter.

In return, as a concession to Lower Saxony, which controls the second-biggest VW stake, Ferdinand Piech, chairman, VW, will be replaced by a neutral third party when his contract expires next year instead of a representative of Porsche.