Lutz: Pich's Brutal "Reign of Terror" Likely Cause of Diesel Scandal

Mark Stevenson
by Mark Stevenson
lutz pich s brutal reign of terror likely cause of diesel scandal

Ferdinand Piëch, the man who ruled Volkswagen like the king of a Teutonic fiefdom, was likely the cause of the diesel scandal that’s erased billions of dollars of value from Volkswagen as it looks down the barrel of a gun loaded with further billions of dollars worth of recall work, fines and law suits.

Or, at least, that’s the claim made by Bob Lutz.

Former auto industry executive Lutz called Piëch’s leadership style “a reign of terror” before saying “The guy was absolutely brutal,” in his latest piece for Road & Track.

Tell us what you really think, Bob.

Lutz alludes to a dinner in the ’90s where he and Piëch sat beside each other:

I told him, “I’d like to congratulate you on the new Golf. First of all, it’s a nice-looking car, but God, those body fits!”

“Ah, you like those?”

“Yeah. I wish we could get close to that at Chrysler.”

“I’ll give you the recipe. I called all the body engineers, stamping people, manufacturing, and executives into my conference room. And I said, ‘I am tired of all these lousy body fits. You have six weeks to achieve world-class body fits. I have all your names. If we do not have good body fits in six weeks, I will replace all of you. Thank you for your time today.’ ”

“That’s how you did it?”

“Yes. And it worked.”

It’s this management style that Lutz blames for Volkswagen’s current state. Why? Instead of me rewriting it, check out Road & Track instead.

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6 of 47 comments
  • Hgrunt Hgrunt on Nov 05, 2015

    When I first read this article, I got about halfway through and before checking the author because it sounded like something Lutz would say. A jovial comment made by someone at a dinner party doesn't necessarily represent how he ran the company, or the kind of culture that was there. Maybe this is the case, but maybe it isn't but as it stands, it's just an opinion piece. I see some B&B draw parallels to Steve Jobs. Jobs's uncompromising management style was partly to create an environment where there was no incentive for imperfection. Even their employee badges are impeccable. McLaren is much the same way, from the tiles on the factory floor, to how the needle in the tach projects a dot on the inside bezel of the gauge. Good leaders will continuously push boundaries that their subordinates didn't know could be pushed, and it does take a firm hand. I can hear you reaching for your keyboard to point out botched product launches and all that stuff, like Apple Maps, or the MP4-12C's door handles. No company is perfect. There are compromises that are made, mistakes that don't appear manifest until later, but what it comes down to is: Hardware design is difficult, manufacturing and logistics even more so. There will be compromises made during all phases, but the true test is how a company chooses what to compromise on, and how they handle the consequences. In the case of the diesel fiasco, VW chose this one poorly.

    • VolandoBajo VolandoBajo on Nov 06, 2015

      There was a good video posted somewhere on the Net, maybe yahoo?, about why Jobs was such a good leader. Didn't save the link, but in the ten minute or so video, taken just after he had returned to Apple, an audience member leads off that he is obviously a bright person. He then asks Jobs to address how Java does or does not address the issues that features in OpenDoc address. Jobs delivers a brilliant explanation and apology about how sometimes good features are casualties of the product design process, but that he has learned the hard way that you have to start with what the customer wants and needs, and work back to a product, instead of building a "really cool" product and then trying to convince people that they have a need or a use for it. He seems demanding of a high standard of quality, but at the same projects a willingness to accept some failures as part of a trial and error iterative process of product development. He doesn't seem to come off as someone who tried to improve Apple by throwing his weight around and threatening people to push product out the door on schedule or else. And believe me, I have seen enough of that kind of management in my career to have a nose for the kind of manager who smiles like a shark as he terrorizes his staff into covering up problems in order to make it look like he had succeeded in delivering on time and under budget. Try for example hiring analysts and talking them into accepting coder pay, because they were supposed to be coding from specs for the next phase that had already been written. Then when the troops (we were basically the Hessians) got there, they found out that they were really hired to do high level analysis to fix fundamental design flaws during an earlier phase, and to turn in resource allocation sheets that showed we were coding the next phase. After all, the previous phase had already been reported as having been completed and delivered! I won't mention any names, but it was our tax dollars at work. Not a unique situation inside the Beltway by far, just a clearcut example. In that situation, you had two choices, either shut up and go along, or move on. Fortunately I was a contract employee and not a lifer, and I chose to move on at the first opportunity. Ironically, while trying to ponder what I should do, and looking out an office window, I saw some of the largest vultures I have ever seen (including in Mexico), sitting on the project's other building across the way. Don't know if it was a sign, but it sure seemed like it at the time. And the end project over all was finally delivered (or so it was reported) years after target, with redefined scope, and with large additional infusions of cash. I didn't mind missing the end "celebration" a bit on that project. But no, I don't think Jobs was a ham-handed manager pushing people to pretend in order to meet goals. I think that instead, that kind of deception would be one of the few things that might have caused him to get rid of someone who was a bright engineer.

  • Pch101 Pch101 on Nov 05, 2015

    Type "Jose Ignacio Lopez" into your favorite search engine. Not a surprising outcome.

    • VolandoBajo VolandoBajo on Nov 06, 2015

      Congratulations pch, at least marginally relevant. Though the fact that the guy has been gone from VW for almost twenty years would seem to indicate that he is unrelated to current events there. Unless you are arguing that he was merely a scapegoat, and that the corruption was much more widespread and entrenched. Though I don't know how we would be able to know if it is a case of that, or just two different bad top managers, twenty years apart. Got anything else that might fill in the blanks on corporate culture during that twenty year interval?

  • Inside Looking Out Inside Looking Out on Nov 05, 2015

    I see popup window on my PC which hangs at the bottom of page and is honestly annoying. It says "Massive Volkswagen Sale Going On! Get Our Lowest Volkswagen Price Now". Do you know how to get rid of it? Thank you. I tired of all these annoying ads popping up on TTAC.

  • Von Von on Nov 06, 2015

    On one hand, you have a very demanding docktor professor. On the other, there is a situation that could've been fixed in 6 weeks, but has festered until a threat on careers were made by someone with real teeth. So...I guess what I'm saying is that if you were to play the devil's advocate, the blame is not entirely on the old man with no teeth.