Before the VW diesel emissions scandal became public knowledge, we reported in April 2015 on Ferdinand Piech's surprise ousting from the company and the legacy he left behind. Read the article below:
Nobody could have predicted – or hoped – that Ferdinand Piech’s association with the car maker founded by his grandfather would end in such a dismal manner.
An emergency meeting of Volkswagen’s supervisory board was called on Saturday 25 April; the location a regional airport in northern Germany, not far from VW’s Wolfsburg HQ.
It proved to be the final destination for Piech after nearly half a century at the heart of Porsche (founded by his grandfather Ferdinand Porsche after WW2) and Volkswagen, the brand that grew out of the Beetle, a car originally designed by Ferdinand Porsche.
Piech made his name as the engineer behind the Porsche 917, and the strategic and engineering mind behind the long-term reinvention of Audi as a premium brand. His merciless approach oversaw quattro, pioneering aerodynamic design, the benchmark construction quality of the Mk 4 Golf and the ultimate road car engineering of the Bugatti Veyron.
He was also widely celebrated in Germany for saving VW from potential bankruptcy and mass job losses when he took over the ailing VW brand in 1993.
He built up the VW Group by bringing in new brands – notably Skoda, which has become a significant success – and driving VW, from the back seat for the last 13 years, to become the world’s second largest car maker.
His tenure came to an unexpected end when he was accused by members of the board of trying, for a second time within two weeks, to overthrow his long-time collaborator Winterkorn.
It was the second meeting since Piech, chairman of the supervisory board, had attempted to destabilise Winterkorn.
At the beginning of April, Piech had been quoted in the German press as saying he was "no longer aligned" with Winterkorn. Based on Piech’s previous record of expelling senior figures he felt had failed, this kind of understated comment was widely understood to mean Piech wanted to see Winterkorn replaced, and quickly.
The result was to throw VW into an immediate management crisis (German companies pride themselves on consensual management) which saw the supervisory board meeting confirm that Winterkorn was safe as the VW Group boss. The statement even described Winterkorn as "the best of VW".
Piech had, for once, failed to get his own way, being forced to sign up to the supervisory board’s statement of support.
A few days later, however, rumours within VW began swirling that Piech had refused to accept defeat and was lobbying to get Matthias Mueller to replace Winterkorn.
At the Braunschweig airport meeting it seems the supervisory board finally turned as one on Piech, and he and his wife - who was also a board member – resigned.
Although it will probably never become public knowledge, there is probably more to Piech’s ousting than meets the eye. For a start, the VW Group is not in the best shape, despite being the world’s second biggest car maker.
VW brand profit margins are just 2.6%, and the VW Group is almost completely propped up by the huge profits being made by Porsche and Audi. VW is also, by the standards of Toyota, significantly overmanned, with some hundreds of thousands more employees than the Japanese company.
The VW brand is still a minnow in the US (unlike Toyota) and sales have been sliding backwards as VW management completely mishandled the need to roll out as many SUV and crossover models as possible, as soon as possible.
VW is also spending huge amounts of money rolling out its MQB factory programme across the world, which is proving extremely expensive.
Based on what’s known about Piech’s taste for competition, he’s probably not pleased that Audi has no rival for the i3 and i8 which, arguably, gives BMW the look of the current automotive technology leader.
More to the point, Piech faced both the Prime Minister of Lower Saxony and the company’s union representatives on the supervisory board. It’s hard not to conclude that Piech’s main solution for fixing VW woes was much more aggressive cost-cutting and job losses via a VW Group boss who was willing to force these moves through.
Germany’s consensual industrial system is designed to prevent just such dramatic moves, however. It was Piech’s success in turning VW around during the 1990s that made him so popular with local government and unions.
I suspect it is Piech’s instinct that VW – and particularly the VW brand - is once again oversized and overweight, and needs to be resized for future prosperity. It’s no surprise, then, that the same groups who praised him for growing the company are duty bound to prevent him trying to shrink it.
The Piech-Porsche family has long seen Porsche and VW as its baby. Indeed, the history section of the Porsche Holding website tells a very interesting story.
It says that in the immediate aftermath of WW2, while Ferdinand Porsche was interned by the Allies in France, his daughter Louise and her brother Ferry moved to "prevent their father’s life work [Porsche engineering and the People's Car] from the threat of seizure by the occupying powers".
In my view, Piech still has this fierce familial loyalty to the family firm. His attempt to use his long-standing hold over VW to trigger a new direction failed spectacularly as even members of the extended Porsche family are thought to have stood against him.
If Piech thinks his grandfather’s industrial legacy is at medium-term risk, however, he is not going to sit back and watch it happen.
I once managed to speak to Piech, in Qatar, which was a rare event. I wondered what was the point of VW Group being the biggest car maker in the world. He took me by the elbow and pointed skywards. "There are always targets, even unto the stars", he said.
I very much doubt that the master strategist has now walked away into retirement.