Tuesday 28 March 2017

Going, Going, Gone? Ferdinand Piech to Sell His Stake, Relinquishing Final Lever of Control over VW

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Ferdinand Piëch

The word is out, Porsche has confirmed: Ferdinand Piëch, the titanic Volkswagen and Porsche alpha figure, is ready to sell his 14.7 percent share in Porsche SE, the holding company that controls Volkswagen. If Piëch isn’t bluffing and the sale happens, it will close the book on the most extraordinary automotive career of the modern era. It also will mark the definitive end of an era that saw VW rise from a lazy, government-influenced maker of mediocre mass-market cars to the automotive world’s most formidable and aspiring powerhouse. Almost all of it was Piëch’s vision and making.

The now 79-year-old father of 12, a grandson of Ferdinand Porsche, graduated from college in 1962 and then joined Porsche, where he worked on the first-generation 911 before its launch. He subsequently was fired because he hedged the company’s fortune on the monstrously powerful 917 race car. The car rewrote automotive and racing history, but the family had had enough.

Piëch hadn’t. He joined Audi, launched the five-cylinder engine, and then hired Fritz Indra from BMW Alpina to work on, among other things, the 1980 Quattro, which revolutionized rally racing.

In 1993, Piëch went from Audi to VW. Piëch’s vision, with Audi setting its sights on BMW, was to turn VW into a formidable Mercedes-Benz competitor and pit Škoda against Volvo and SEAT against Alfa Romeo.

On the side, he fostered the acquisition of Bentley, Bugatti, and Lamborghini, with incredible results everywhere. Just look at the growth of Bentley, which once lived in the shadow of Rolls-Royce. The resurrected Bugatti turned out the Veyron and the Chiron, considered pinnacles of automotive engineering.

While many of Piëch’s visions became reality, more than a few didn’t work out. The notion that the VW brand could take on Mercedes-Benz went nowhere, as its upmarket efforts flopped: first the Passat W-8 and then, on a grander scale, the luxurious Phaeton. And while Piëch was obsessed with perceived quality—evidenced by his focus on small body gaps—real-life quality, in the form of reliability, was often problematic.

The “greatest living product guy,” a title bestowed on him by Bob Lutz, played the power game expertly. He fostered a hierarchical corporate culture that rewarded loyalty and success. He was respected and feared and wouldn’t take no for an answer. He handpicked former BMW CEO Bernd Pischetsrieder as his successor when he moved up to the supervisory board—and quickly dumped him when he was displeased by the cars delivered by Pischetsrieder and his chief designer, Murat Günak.

Some say that Piëch’s authoritarian management style created a climate that led to the diesel emissions scandal. So far, though, no one has proven that he actually knew about the deceit. Piëch claims that he confronted then CEO Martin Winterkorn on the topic in early 2015, and when he got unsatisfactory answers, he initiated a power struggle that he eventually lost. When Piëch’s former allies, the labor unions, sided with Winterkorn, his position couldn’t be saved. Piëch withdrew from his supervisory-board position. A few months later, the diesel scandal broke and quickly swallowed Winterkorn.

Over the decades, Piëch had been a controversial figure within the Piëch and Porsche families, which jointly own Porsche and VW. His powerful cousin, Wolfgang Porsche, preferred a much more inclusive management style (although not one that included Piëch), and with Piëch’s diminished role, he saw the chance to push him off the Porsche Automobil Holding SE board entirely.

Sitting on a $1 billion share package and watching things powerlessly from his Salzburg mansion doesn’t seem to be Piëch’s style. At the moment, the families, which have the first right to acquire Piëch’s shares, appear to be in negotiations over the sale. If it doesn’t go through, there could be yet one more twist in this saga.

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