The conflict over the future of Volkswagen, Europe's largest carmaker, will deepen today with the resignation of Wolfgang Bernhard, head of the VW brand and architect of its restructuring. He is the second senior executive to quit in 10 days.

His departure, due to be confirmed by the group's supervisory board, will undermine the surge in VW shares, which yesterday reached an eight-year high on speculation that Porsche, the luxury sports car maker, will mount a takeover bid.

Mr Bernhard, a former Chrysler executive entrusted with turning around profits at VW's core brand, is arch-enemy of Martin Winterkorn, the group chief executive after last week's shock ousting of Bernd Pischetsrieder. Mr Winterkorn, head of the lucrative Audi premium cars division, is a close ally of Ferdinand Piech, VW's chairman, who orchestrated the boardroom coup that unseated Mr Pischetsrieder.

Porsche, which on Wednesday announced record full-year earnings of €2.1bn (£1.4bn), has raised its stake in VW from 21.2% to 27.4% and its board has given the go-ahead for this to rise to 29.9%, just short of the 30% that triggers a mandatory takeover bid under German law.

The Porsche board also approved plans to increase its equity capital by a half, prompting some analysts to argue that it would use this swollen warchest to take full control of VW.

Stephen Cheetham of Sanford Bernstein said in a note to clients: "We believe this may presage a full bid by the company for Volkswagen, fulfilling Ferdinand Piech's evident wish to control the company ahead of a likely expiry of the VW law limiting any one shareholder to 20% of voting rights." The European court of justice is likely to rule the law illegal under EU treaties next year.

Porsche insisted that it had no intentions of building up its stake to 30% or more.