Mr. Piëch had sought to force out Martin Winterkorn as Volkswagen's chief executive. But Mr. Winterkorn, 67, refused to go and other members of the supervisory board rallied behind him, handing Mr. Piëch, who is 78, a shocking defeat.
Volkswagen said in a statement on Saturday that Ferdinand Piëch would resign as chairman of the automaker's supervisory board.
Mr. Piëch was exacting, willful, feared by subordinates and obsessive about his company's products. He was also remarkably successful, leading Volkswagen from near bankruptcy in the early 1990s to No. 2 automaker in the world, after Toyota. Like Steve Jobs at Apple, Mr. Piëch was among a handful of executives whose personal stamp was unmistakable on the companies they ran.
Mr. Piëch's departure resolves an internal power struggle at Volkswagen but not the formidable challenges that the automaker faces, including slim profits, dwindling market share in the United States and an organization that critics say has become bloated and inefficient.
Volkswagen earns a profit of just 6 percent on sales, compared with about 9 percent for Toyota. And most of Volkswagen's earnings come from its high-end brands. The Porsche division, with sales last year of about 200,000 vehicles, earned more than Volkswagen-brand cars with sales of more than six million.
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With Mr. Piëch gone, there are likely to be some who question the business logic of the automaking empire he built. Volkswagen manufactures everything from Skodas that sell for less than 9,000 euros ($9,600), to Bugatti super sports cars that sell for more than $1 million. The company, based in Wolfsburg, Germany, also makes MAN and Scania trucks, Ducati motorcycles, Bentley luxury cars, and Lamborghini sports cars.
"A lot of his obsessions were distractions that cost money," Karl Brauer, a senior analyst at the automotive research company Kelley Blue Book, said in a telephone interview on Sunday. Volkswagen's size could still prove to be an advantage, Mr. Brauer said, because the company benefits from efforts to share components among its wide array of vehicles.
But the loss of the Volkswagen patriarch also raises the question of whether anyone, even the formidable Mr. Winterkorn, will bring the same resolve and attention to detail.
"Most people would say Piëch got the company going in a direction that made it one of the biggest car companies in the world," Mr. Brauer said. "He has to be given credit for that."
Volkswagen may also need to cut costs more aggressively, especially in Germany, a difficult task for a company that is 20 percent owned by the government of the state of Lower Saxony, and where labor unions exert strong influence.
Berthold Huber, former president of the IG Metall labor union and a member of the Volkswagen supervisory board, is serving as acting chairman of the company until a permanent successor to Mr. Piëch is named. That is the equivalent of the president of the United Automobile Workers overseeing Ford or General Motors.
Though Toyota produces more cars than Volkswagen, it has far fewer employees. Part of the discrepancy reflects the fact that Volkswagen produces more of its own components, like brake discs and seats, than Toyota, which buys more parts from outside suppliers. But the high number of employees is also a reflection of how hard it is to shrink the work force in Germany.
In Europe, Volkswagen is by far the biggest carmaker. All its brands together command a 23 percent market share in the European Union, more than double that of PSA Peugeot Citroën, the No. 2 automaker in Europe. But the European market, though recovering, does not offer the same long-term potential for growth as China, the United States and Latin America.