Porsche's Future Mit Dem Volk

Robert Farago
by Robert Farago

Since 1969, Porsche has developed three vehicles with Volkswagen/Audi: the 914, 924 and Cayenne. While we can debate the contributions these vehicles have made to Porsche’s corporate survival, they’re not vehicles that have brought greater glory to Porsche's sports car cred. And yet Zuffenhausen's zealots want us to believe that their decision to take control of Volkswagen is a good thing for both automakers. How credible is that?

My go-to Porsche guy, salesman Kirk Stingle, is on board with the German automaker's justification for its "Maus That Roared” Vee Dub takeover. With the so-called Volkswagen law (guarding Lower Saxony’s controlling interest in VW) headed for the legal dumpster, Porsche had to move to protect its parts supply. “You like your air conditioning unit?” Kirk asked. “Without VW? Fuhgeddaboutit.” For its part, VW gets Porsche’s production expertise.

Uh-oh. That sounds an awful lot like a lopsided proactive synergy defense. Do the letters DCX mean anything to anyone? To me, Daimler-Benz’ failed hook-up with The Crisis Corporation reveals a truism: the Germans aren’t very good at playing with others. Of course, in this case, we have Germans playing with Germans.

In fact, the acquisition is a German version of “All in the Family,” with VW Boss and Porsche shareholder Ferdinand Piëch playing Archie to freshly minted CEO Martin Winterkorn’s Meathead. Imagine the hilarity when they discuss the workmanship produced by Porsche’s foreign plants! Alternatively, schwäbisch Sopranos.

As we’ve outlined here before, VW is in an echt Pökel. The automaker's obese brand portfolio is a disaster. VW, SEAT and Skoda battle each other at the low end (hemmed in by Audi), while Audi, Bentley, Lamborghini and Bugatti duke it out at the top. Meanwhile and in any case, the German labor unions have Volkswagen by the short and curlies.

So here’s the theory: by minimizing the State of Lower Saxony’s ownership/control of VW, the takeover will loosen the union’s hold on the company, which will allow VW to bring some “sense” to their German labor contracts. At the same time, Porsche wunderkind Wendelin Wiedeking will teach VW how to make money through outsourcing, engineering, rationalization, platform sharing and generally kicking ass.

Time for some unbequem Wahrheit.

Despite calls for his resignation, the CEO who got VW into this mess in the first place is still large and in charge. I wouldn’t call Ferry Porsche’s grandson a megalomaniac, but this is the same CEO who publicly declared VW’s intention to match Mercedes-Benz’ product line model for model, up to and including the S-Class (hence the ill-fated Phaeton). Look how well THAT strategy turned out.

By the same token, Piëch’s “grand” vision created VW’s bloated brand portfolio. By adding Porsche to Volkswagen’s stable (or vice versa), brand overlap is about to get worse, not better. We’re talking Porsche 911 vs. Audi R8; Porsche Boxster vs. Audi TT; Porsche Cayenne vs. Audi Q8; and Porsche Panamera vs. Audi S8, Bentley Continental GT and VW Phaeton.

Although Piëch is reputed to rule his complicated kingdom with an iron fist, there’s still a GM-style bureaucratic bun fight to see who gets how much of what technology and marketing support, and when they get it. Can Porsche really work its cost-cutting magic on such a convoluted corporate culture? While Porsche knows a thing or two about building excellence on a budget, what makes them think they can convince thousands of managers and engineers that small is beautiful?

To my eye, this whole deal looks like a not-so-simple extension and consolidation of Piëch’s power. On the face of it, Porsche gets VW. In fact, Piëch gets Porsche AND ditches Lower Saxony. What he doesn’t get– and isn’t up for discussion– is a plan for extricating Volkswagen from its German labor woes and the branding Hell the former VW CEO and current Board member created.

Not that I care what happens to VW. As far as I’m concerned this deal should be called “Cry My Beloved Automaker.” Porsche, my favorite automaker on planet earth, the company that produces the best sports car money can buy, the poster child for this website’s “stay small, stay focused” mantra, is about to be subsumed by Volkswagen’s gi-normous bureaucracy.

Anyone who thinks this German merger of unequals won’t affect Porsche’s ability to keep their eye on the ball should carefully consider the 914, 924 and Cayenne. These vehicles stemmed from a partnership with VW, where Porsche could have (should have?) pulled the plug on any or all aspects of the various projects. Can you imagine a Porsche designed by a committee balancing its needs against those of VW, SEAT, Skoda, Audi, Lamborghini, Bentley and Bugatti?

In a world of compromise, Porsche stood apart. Not anymore.

Robert Farago
Robert Farago

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  • Cheezeweggie Cheezeweggie on Apr 11, 2007

    Eventually there will only be a handful of auto companies. Individual brands will be as "individual" as Buick and Pontiac.

  • Thomas Minzenmay Thomas Minzenmay on Apr 11, 2007

    Very nice article. I think Piech's role shouldn't be underestimated. He has a huge ego and even though he hasn't been Volkswagen CEO for 5 years, he's now chairman of the supervisory board and still holding all the strings. As RF pointed out, Porsche officials like Wiedeking claim that the main reason for their controlling stake in VW is to protect their interests, aka. using VW facilities and parts (something they've been doing for quite some time). Porsche claims that VW could attract raiders as soon as the VW Law is gone, since they could figure that the individual parts of VW are worth more than the whole lot, which would also jeopardize Porsche's interests. But that's only half the truth. Piech wants to create his own monument. He wants his family to be in charge of Europe's biggest automaker and he wants to challenge Toyota on a global scale. I wouldn't be as pessimistic as RF about Porsche though, as it's Porsche who's running the show. Porsche now dominates the supervisory board over in Wolfsburg, while VW hasn't anything to say in Stuttgart. Wiedeking understands how Porsche works (after all, he's responsible for Porsche's resurrection) and he understands that Porsche can never make any compromises. Another interesting theory concerning Porsche's increasing stake in Volkswagen is that with the new CO2 reduction laws coming to Europe, Porsche might want to reduce its (naturally) high average CO2 emissions, by getting hold of VW which has a quite low CO2 average.

  • Lorenzo Are there any naturally aspirated engines available?
  • Lorenzo Six percent here, ten percent there, and pretty soon you've got a dead brand.
  • ToolGuy Tungsten trim? I am holding out for the Depleted Uranium trim.
  • Proud2BUnion Mr. Allen Wrench needs tungsten to live!
  • Lorenzo All the efforts made over decades to reduce/eliminate NVH in ICE cars, and now they're putting noise and vibration into electric cars. It reminds me of efforts to make veggie burgers taste like meat. Vegetarians don't want the taste of meat, and meat eaters will want meat, not veggie burgers.
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