By on May 16, 2009

A man who doesn’t spend time with his family can never be a real man. Piech certainly spends a lot of time with his family; however, they‘re seldom good times. It has been a long tradition for the Piech and the Porsche side of the family to fight each other and the power struggle over at Volkswagen is merely an extension of that.

For a long time, it looked like Piech would be the loser in Porsche’s Volkswagen takeover. Since the 1980s, the Porsche part of the family held a majority stake in their car company. Back then, Piech‘s brother—in complete secrecy—sold his shares in Porsche to Arab investors (after getting into financial troubles because of some dubious real estate deals). This was a sacrilege! No outside party should get their hands on the family business!

When Piech found out about it, he cried, “I know it was you, Fredo. You broke my heart,“ or something to that effect, and called for a family meeting. The family decided to buy back the lost stake instantly in a combined effort. As a result, the Porsche family ended up with half of the shares that formerly belonged to Piech‘s brother.

With Porsche ruling Volkswagen and Piech not being in control of Porsche, he would ultimately have to answer to Wendelin Wiedeking, something that is unacceptable to someone with Piech‘s ego.

Piech hates Wiedeking with a passion. Piech considers Wiedeking an outsider, the hired help, an employee who holds far too much power. If it had been up to him, Wiedeking would have lost his job a long time ago. Unfortunately for Piech, Wiedeking is the protégé of Wolfgang Porsche, Piech‘s cousin and the new strong man of the Porsche family. In Piech‘s eyes, Wolfgang isn‘t even in his class, merely one of these MBA types who don‘t know anything about cars. And so, while everybody thought that he had finally been beaten, Piech did what he does best: Pulling the strings.

For a long time, he adhered to Vito Corleone’s advice to keep your friends close but your enemies closer. That changed in September of 2008. Piech dealt the decisive blow to his cousin Wolfgang and his man Wiedeking. An important vote took place in Wolfsburg: The supervisory council of Volkswagen had to decide whether Porsche could deal with Audi directly, or whether it had to be consulted every single time.

According to German law, unions and shareholders each control half of the supervisory board. In case of a deadlock, the vote of the chairman, who‘s appointed by the shareholders, counts twice. The unions have been protesting against Porsche for quite some time, so it came to nobody‘s surprise that they didn‘t support Porsche, which meant that Piech had the decisive vote. But somehow, he went missing. In his absence, Piech‘s proxy abstained from voting and Porsche lost the vote. On top of that, Porsche lost another crucial vote that day that could have put an end to the “Volkswagen-Law“ which gives the federal government a blocking minority. This also meant that Porsche could not possibly get their hands on Volkswagen‘s cash reserves in order to reduce their debt. Wolfgang Porsche was furious. “I am appalled by the voting behavior of the chairman,“ he told the press.

With the global economic meltdown hitting the auto industry, Porsche got into even deeper trouble, since the banks refused to prolong the cheap credit Porsche needed so dearly. So the family was forced to adjust their strategy. Instead of taking over Volkswagen, they are now working on a merger. And guess who‘s calling the shots.

Piech made it clear that Porsche will be just another brand in the Volkswagen empire, that headquarters will remain in Wolfsburg and that his man Martin Winterkorn will be CEO.

Like many unfortunate souls before him, Wendelin Wiedeking had to learn the hard way that you don‘t mess with Piech. When asked whether Wiedeking had a future in the new Volkswagen/Porsche alliance, Piech answered: “He would have to take several steps down the ladder. The role play would have to change from someone who‘s used to march through to someone with humbleness—I don‘t know.“

He couldn‘t have been clearer.

Don Piech is about to fulfill his life dream: To forge an automotive giant that builds everything from big commercial trucks to luxurious sports cars to tiny econoboxes controlled by the family. And most importantly, instead of Wolfgang Porsche and his guys in Stuttgart, it is now Ferdinand Piech and his guys in Wolfsburg who have the upper hand.

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27 Comments on “Editorial: Ferdinand Piech: The Godfather, Part 2...”


  • avatar
    Ingvar

    These two editorials are a mong the best I’ve ever seen at this place. Reminds me more of a greek drama than anything else. Or perhaps King Lear?

  • avatar
    John Horner

    Great stuff. Thank you Mr. Minzenmay!

  • avatar
    Lichtronamo

    Great editorials – great story. Piech is one cold-blooded NSFW. The Godfather analogy is most appropriate.

  • avatar
    Lichtronamo

    After reading these, I want to go out and buy a Pheaton just to share in a bit of Piech’s mad genius.

  • avatar
    Martin B

    Fascinating. Two great editorials.

  • avatar
    rpol35

    “Piech? You mean Wiedeking?”

    “Wiedeking is a pimp, he could have never outfought Porsche. I never knew it until this day but it was Piech all along.”

  • avatar
    michaelonly

    This is a fantastic write-up … write a book about this – PLEASE

  • avatar
    MagMax

    Fascinating insider information and analysis. This Piëch story along with Bertel’s accounts from inside VW are some of the best automotive writing I’ve seen in years. And this is why I come back to TTAC day after day.

    Thank you, Thomas, and thank you, Bertel. Don’t stop now but bring on the next chapter, please.

  • avatar
    ZoomZoom

    I love that picture. It says volumes!

  • avatar

    That Piech has the business morality of a mafioso shouldn’t be surprising. The apple doesn’t fall too far from the tree and his grandpa was one of history’s most amoral engineers. Grandpa used slave labor making weapons for the Nazis.

    Oh, and he also stole the layout of the Volkswagen from Jewish engineer Josef Ganz and his air cooled boxer motors infringed on the patents of Hans Ledwinka at Tatra.

  • avatar
    blowfish

    Oh, and he also stole the layout of the Volkswagen from Jewish engineer Josef Ganz and his air cooled boxer motors infringed on the patents of Hans Ledwinka at Tatra.

    I always felt there is a connection with Prof Hans Ledwinka. Now i found it.

  • avatar
    Ingvar

    @Blowfish:

    “Ledwinka’s concepts were copied by Ferdinand Porsche, who knew Ledwinka personally and exchanged ideas with him. Tatra sued Volkswagen about the breaches of the similarities in the Volkswagen design which has been virtually copying Tatra T97. The lawsuit vanished as the Nazi Germany invaded Czechoslovakia in 1938, and Hitler ordered the production of Tatra T97 to be halted. Only 500 cars were produced.

    Porsche’s successors later had to acknowledge the influence of Ledwinka’s Tatra models on the Porsche-designed Kdf-Wagen of 1938 (later known as the VW Beetle), and a new post-war lawsuit resulted in a DM3,000,000 settlement paid by Volkswagen to Ringhoffer-Tatra.”

    http://en.wikipedia.org/wiki/Hans_Ledwinka

    • 0 avatar
      akcaptruth

      The ‘assertions’ that were in the Wikipedia article suggesting Porsche copied the Beetle from Tatra were based singly on a book called “Car Wars” by Jonathan Mantle… it carried the subtitle ” Fifty years of Backstabbing, Infighting and Industrial Espionage in the Global Market… and also “Fifty Years of Greed, Treachery and Skulduggery int he Global Market.”

      The author was previously noted for… his sensational biographies of the Benetton family and… his unauthorized biography of Andrew Lloyed Weber. Car Wars itself is noted for grossly lacking documentation to assert its bigger sensational claims.

      For a while, the Wikipedia article floated the notion that Porsche copied Tatra.. without detailing Porsche’s long history and devotion to the idea of a people’s car… long before Hiter, long before Volkswagen.

      When reading a Wikipedia article that makes Big Statements, always check the sourcing, and ask yourself how solid the material really is. Anyone wanting to know more about the real history of VW, Porsche and Tatra might do well to find other, solid sources for their conclusions.

       

  • avatar

    Ferdinand Porsche and Ledwinka frequently discussed their projects in the 1930s and eventually Porsche acknowledged that he “occasionally looked over the shoulder of Ledwinka”. Though the Tatra company was in Czechoslovakia, it was controlled by a volksdeutch family that had connections to the Gestapo. Apparently those connections were not powerful enough to offset Hitler’s attachment to his favorite engineer, Porsche, and Tatra’s efforts to be compensated for the infringement was more or less suppressed.

    Tatra continued the legal battle with the postwar VW company. The case was eventually resolved with the above mentioned 3 million DM settlement, in 1961. The matter is still a sensitive subject in both Wolfsburg and Stuttgart. While VW and the Porsche company have perhaps grudgingly acknowledged that Dr. Porsche’s boxer motors were not completely original, the matter of Josef Ganz’ 1933 Standard Superior “Volkswagen” is even more sensitive.

    While BMW and Mercedes-Benz both acknowledge Ganz’ important contributions to BMW’s first in-house designed automobile and to the landmark M-B 170, he’s persona non grata with the Porsche family of companies.

  • avatar
    SpeedRacerrrrr

    he also stole the layout of the Volkswagen from Jewish engineer Josef Ganz and his air cooled boxer motors infringed on the patents of Hans Ledwinka at Tatra

    The concept of “stealing” an idea in business can sometimes be a little vague. It’s often not who comes up with the idea, it’s who gets the idea commercialized successfully. This vagueness is, I believe, even reflected in patent law.

    A prime example of how things can go is the graphical/mouse user interface for computers, which we all take for granted now: Developed from original work by a research scientist at Stanford University in the 1960s, then first produced in the early 1980s by Xerox, who then sued Apple for cribbing the idea after Apple introduced the Macintosh, while Apple itself was suing Microsoft for “stealing” the same idea. Microsoft, the third party removed from the actual idea creation, won that suit in the end, I believe, patents be damned.

    In the end, it’s who successfully commercializes the idea who is the winner. The inventor himself often gets left in the dust. There’s probably no argument from anyone here that VW/Porsche successfully commercialized the idea beyond everybody’s wildest dreams.

    Of course, the bad feelings on the part of the individuals and families involved can last for generations.

  • avatar
    SpeedRacerrrrr

    Apparently those connections were not powerful enough to offset Hitler’s attachment to his favorite engineer

    Ferdinand Porsche was a household name in Germany by the time Hitler came along. Porsche’s exploits in car design and racing had already well established his credentials with the general public. So you could say, Hitler’s intent in backing Porsche was to “ride on his coattails” so to speak. It also served Hitler’s purpose to be a lever against the established automotive powers at the time in Germany, who viewed Hitler with much suspicion.

    By contrast, Ledwinka was, although technically talented, a bit of a rube. It wouldn’t have served Hitler’s purpose to back Ledwinka, who, I don’t believe, had any public standing at all.

    As often happens in life, it was a situation where politics and personal agendas played a huge role.

  • avatar
    DearS

    The Porsche group sounds like its truly a tragedy. Piech seems to be a very scared man-child trying to prove and maintain the idea that he is important. He has probably never felt loved. That this is the ruling class is also very sad to me. My God is the world in a wounded state.

  • avatar

    I strongly agree with Ingvar; this series has been excellent.

  • avatar
    SpeedRacerrrrr

    Piech seems to be … trying to prove and maintain the idea that he is important

    Errr, well, he is kinda important…

    - One of the richest men in Europe.
    - Heir to one of the biggest automotive dynasties in the world.
    - Lead engineer for some of the most successful automotive technology ever produced (in many genres from racing to production vehicles)
    - A leader of companies employing more than 400,000 persons world-wide
    - A father to more than a dozen offspring

    Sounds like a pretty important person to me …

  • avatar
    psarhjinian

    You know what’s not interesting? The tale of corporate succession at Toyota.

    You know what’s wonderful for taking executives’ eyes off the goal of running a successful business? An interesting corporate succession.

    They must be allowing themselves reserved grins over in Aichi, watching one of their biggest rivals mire itself in infighting. It must be about as much fun as watching Ford, GM and Chrysler do the same from about 1975 onwards.

  • avatar
    psarhjinian

    Errr, well, he is kinda important…

    History can be very unkind to important people, especially if they make a point of trying to remain so.

  • avatar
    SpeedRacerrrrr

    History can be very unkind to important people, especially if they make a point of trying to remain so.

    Remember Henry Ford’s famous quote about history: “History is more or less bunk.”

    I don’t think people like this worry too much about what some future ‘history’ might say. They are too busy making history now.

  • avatar
    SpeedRacerrrrr

    You know what’s not interesting? The tale of corporate succession at Toyota.

    If only we as a society could figure out a way to clone those conditions for all our businesses. Unfortunately, Toyota is the exception rather than the rule, even in Japan.

    And, to be fair, Toyota has it’s weaknesses. A lack of inspiring product, for one. That doesn’t matter to a lot of people, but imagine if Toyota didn’t have the technical developments from Europe to keep them honest.

  • avatar
    psarhjinian

    I don’t think people like this worry too much about what some future ‘history’ might say.

    I think they do, and in fact worry a great deal more than nobodies like you or I.

    It’s just not “worry” as you or I understand the concept.

    The more self-important you are, the more of an issue your legacy is. There is a reason why Rockefeller, Carnegie, Nobel and the like named prizes and foundations after themselves very late in their lives, and it has a lot to do with not wanting to go down in the books as evil bastards.

  • avatar
    kurtamaxxguy

    Very informative editorial, good stuff.

    It will be interesting to see in coming months how Piech uses his authority to direct his growing empire, and what parts fare better or worse.

  • avatar
    GermanEngineer

    Hello Guys,

    for those interested I post a story of DER SPIEGEL, Germany’s leading news magazine. It’s in my opinion among the best articles of The Porsche-VW saga to date:

    http://www.spiegel.de/international/business/0,1518,637243,00.html

    But, of course, your editorial is also a great piece of art, Mr. Minzenmay

  • avatar
    akcaptruth

    The sources cited in the Wikipedia article to substantiate the big assertion that Porsche copied Tatra were listed as one source: a book called “Car Wars: Fifty years of Greed, Treachery and Sculduggery” by Jonanthan Mantle.
     
    Mantle had been noted at that point in his career for his biography of the Benetton family and his unauthorized biography of… Andrew Lloyd Weber.  The book itself is noted for its fairly shoddy journalistic standards, with many glaring factual errors and hugely thin sourcing.
     
     
    But because of its sensation nature, the assertions have been widely copied… not verified, just copied.
     
    When reading a Wikipedia article, its the reader’s responsibility to verify the sources of the information.  Wikipedia is intended as a channel for verifiable information.  Any information that is unsourced or poorly sourced is suspect… like the big notion that the VW Beetle was largely copied from Tatra.  Forgetting that Ferdinand Porsche had been shopping his idea for a rear-engined, air-cooled people’s car for decades before Hitler, before Volkswagen.
     
     


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