VW and Porsche: Germany’s unending automotive saga
The Local · 25 Jul 2009, 10:49
Published: 25 Jul 2009 10:49 GMT+02:00
- The man in the driver's seat: VW's Ferdinand Piech (23 Jul 09)
- The rise and fall of Porsche's Wendelin Wiedeking (23 Jul 09)
Why should we worry about the woes of a few billionaires caught in a family feud over their car-making empire? Should we really be captivated by the fate of an arrogant executive like Wendelin Wiedeking, who was unceremoniously fired after leading Porsche for 17 years – and given €50 million for his trouble? And why are we interested in the future of a car company that makes products most people cannot even afford?
The luxurious problems of the Porsche-Piëch automobile dynasty wouldn’t be worth all the excitement seen last week, if they didn’t so clearly demonstrate how business works. That is, normally it’s all about money, power and intrigue. The business world, so it seems, is full of brilliantly unpredictable people (VW godfather Ferdinand Piëch), individuals who clearly overestimate their own abilities (Wendelin Wiedeking), and those ready to profit politically from the mistakes of others (Lower Saxony’s premier Christian Wulff).
Wiedeking’s dream was nothing if not epic: he wanted to lead the world’s largest carmaker by swallowing Volkswagen even though it was 15 times bigger than Porsche and he didn’t have the cash upfront. He tried and failed, but he’s certainly no tragic hero. His career as a fabulously well-paid auto executive might be over, but it was not without its achievements. He resurrected a German automotive legend – turned a Porsche ready for the scrap yard into one of the world’s most valuable and fascinating brands. But in the end, the straight-taking man from Westphalia was tempted by the worst parts of casino capitalism and was consumed by his own delusions of grandeur. He also underestimated the 60 members of the crazy Porsche-Piëch clan, which slowly abandoned him.
Could it all have been avoided?
The family-run business Porsche might be listed on the stock market, but that doesn’t make its management transparent or particularly well controlled. The Piëchs and Porsches failed to stop the company’s executives from engaging in financial acrobatics. Instead, the cousins Ferdinand Piëch and Wolfgang Porsche carried out a family feud that affected everyone from the VW and Porsche workers councils all the way to the highest levels of German politics. Nothing shows more clearly the darker side of Germany’s famed family-run companies, which are supposed to be models of sustainability and discretion.
Admittedly, the global financial crisis kyboshed Porsche’s dealings with VW stock options. But the firm was also more vulnerable than many others. Its management believed it could operate like a hedge fund – while simply making cars on the side. It speculated with money it didn’t have and that’s a risk even small-time investors know they shouldn’t take. But it can be intoxicating when profits are suddenly larger than a company’s entire turnover.
That buzz is now long gone. The flashy Porsche will soon be a modest Volkswagen. The luxury carmaker will be unceremoniously parked alongside VW’s other nine brands in order to rid it of some €10 billion in debt. For Porsche fans it’s an autobahn wreck of epic proportions, but VW supporters will also have their doubts.
Things are unlikely to calm down only because the feuding parties of the last few months are now sitting down together at the same board meetings. The state of Lower Saxony won’t be shy about using its legally sanctioned veto power over VW doings. And the sheiks from Qatar will want to have their say as the company’s new large shareholder. Wolfgang Porsche certainly won’t soon forget that his cousin Ferdinand helped prepare Wiedeking’s precipitous fall. And Piëch will know just how to protect himself from his family’s attempts at revenge.
Germany’s automotive saga has only just begun.