Volkswagen and Porsche Today...

[Wayne 962]

A friend of mine sent me this email:

I scanned this article from the September/October 2007 newsletter of the Vintage Volkswagen Club of America. The author is listed on the club’s webpage as an executive committee member and historian.

It presents a different view of Porsche than we’re used to seeing.


Volkswagen
& Porsche today
Opinions and comments by Heinz Schneider

Anyone who has paid any attention lately to the Wall Street Journal, Automotive News, Auto Motor und Sport, Automotive News Europe or other publications covering automotive news, could not have failed to miss the recent developments at Volkswagen. What is happening is a takeover by Porsche of Volkswagen. These activities are progressing on three levels.
First: There has been the buying in increments of a majority of shares of the Volkswagen Company by Porsche and their ownership stands now at 30.9%. Up until now, a German law had restricted the control of Volkswagen by anyone, no single shareholders or a group of shareholders could control the Volkswagen Company no matter how many shares of VW they owned. In anticipation of this law being soon overturned by the European High Court, Porsche had started to buy VW shares over the last few years. The original German law had been passed to assure that Volkswagen would only operate for the benefit of the German People.

Second: Ferdinand Piech, the grandson of Ferdinand Porsche, after having managed Volkswagen as its CEO for ten years, after taking mandatory retirement in 2002 because of his age, he maneuvered to be appointed head of the VW supervisory board. Now as the head of the supervisory board he was able to have only people of his selection on the VW board. At the insistence of Piech the supervisory board fired his successor as CEO and put his man in place. Piech could not forgive his successor CEO for stopping the export his beloved upscale Volkswagen, the “Phaeton”, to the US.
Third: Piech, together with his new personally selected CEO of VW, fired within a few months most top managers at VW and replaced them with his allies, coming mostly from Audi.

70 year old Ferdinand Piech, the grandson of the Volkswagen designer Ferdinand Porsche, is described by “Automotive News” in its April 2007 issue, as one of the auto industry’s shrewdest personalities. He has accomplished, by using his family’s fortune and influence to take over Volkswagen. By the time you read this and the European court has made its decision, the Porsche Holding Company, owned by the Porsche/Piech family, will probably be in complete control of Volkswagen. Not only will they have a majority ownership of the Volkswagen shares, but Piech will also have his people in the most important positions.

This takeover maneuver is only the last chapter of a long process that had started in 1943. At that time, an attempt was made to give Porsche a financial interest in the VW Company. As it was, because of the war and objections by some high ranking Nazis, it was postponed. It was not really needed since Porsche in 1936 by doing Volkswagen work and other projects for the Nazi government was doing financially quite well for the first time in his life. As one VW accounting expert put it at the time, Porsche billed VW and the government for uncontrollable expenses that never were questioned. Volkswagen even paid for the building of the Porsche facilities in Stuttgart, today still a major part of the Porsche Empire. Accountants at VW who questioned some of the bills submitted by Porsche were told to shut up and pay.

After the war contracts were signed between VW and Porsche that again were most favorable to Porsche. Unaccountable millions were paid by VW to Porsche for licensing rights and for development work of new products. For a long time the Porsche Company, owned by the Porsche/Piech family, was content just to enjoy the benefits of these favorable arrangements. That was until the shrewd grandson Ferdinand Piech gained more influence and now plays a major role at both companies, at Porsche and at VW. Ferdinand Piech openly stated in his autobiography, “It is not his ambition to just maintain the Porsche fortune but to increase it”. Another telling story about this ambitious man is that in a German paper he was quoted, after someone asked him why he had at least 12 known children: “It is my life’s goal to pass on my superior genes to as many as possible”. With his move to take over Volkswagen, the largest automotive company in Europe, he made good on his word to increase the Porsche/Piech fortune and proved that he is cleverest Porsche of them all, or at least the most ambitious.

Ferdinand Piech, the son of Ferdinand Porsche’s sister, was born in Austria seventy years ago. Right from the start he showed a lot of ambition, trained as a mechanical engineer, at first he worked for his uncle Ferry Porsche in Stuttgart, later for Audi. As Volkswagen was in bad shape in 1992 and operating in the red again, he was asked to take over management at Volkswagen. Within a few weeks he cleaned house by firing uncooperative managers and started with a model policy that put Volkswagen back in the black. One of his main achievements was giving major support to the Volkswagen daughter “Audi”, turning it finally into a very successful company. As a consequence Audi at this time, in late 2007, earns more as its parent VW. During his time at Audi, Piech established a strong following that is paying off in his present taking over of Volkswagen. Another important factor in Piech’s success was that over the years he had more support and better rapport with the unions at VW as any of his predecessors. The Unions hold half of the supervisory board positions at VW. In a clever move he allowed union leaders to get very generous personal benefits, over and above what is considered common by average standards. Only starting last year did German prosecutors start to look into some of these questionable shenanigans. It appears some of these labor leaders and politicians went even as far, of having their Brazilian prostitutes disguised as advisors on Volkswagen’s payroll. Piech naturally claims that he had no idea of what was going on. That is not the only legal issue that has come up recently. What started the prosecutors asking questions is the fact that as a major shareholder of Porsche, Piech at the same time is head of the supervisory board at Volkswagen, presenting a possible conflict of interest. Piech is in a position to give large development VW contracts to his family’s business.

Volkswagen originally started out as a project to benefit the German people. It looks now, just as it has been for many years, instead of benefiting the German people, Volkswagen will operated more likely for the benefit of the Porsches. The German people as well as the prosecutors will not dare to question anything that has to do with Porsche. Perhaps in the long run all of the present changes may turn out beneficial, since the late Heinrich Nordhoff, VW management has not done too well and could stand some shake up.

[Wayne 962]

Porsche has been very successful as of late in their niche, riding the global expansion that has occurred since their almost demise in 1992/93. VW has struggled for years with issues of their own making, like dealing with expensive German unions, to spending a fortune on an expensive luxury car that they didn't put under the Audi brand name (silly if you ask me).

It's my personal opinion that Porsche taking over VW will be a distraction, and will eventually be a negative for Porsche. Other than securing the chassis-making contracts already in place (and into the future), I think that Porsche will be inheriting a huge distraction...

-Wayne

[Zeke]

That article smacks of the "Opinions and comments by Heinz Schneider." While I do see Porsche's increasing investment in VW, I don't see things playing out the way Herr Schneider does. No doubt, though, his assessment of Piech can't be too far off.

I could be very wrong about the eventual outcome. And, I whole heartedly agree that basically owning VW and its brands would be "distracting" (at best).

[RichF]

well hopefully VW can go back to what they were good at with the help of porsches control, making lightweight fun cars.... like the mk2 GTI my favorite

[Soterik]

A few years ago (3 or 4), Herr Schneider wrote an expansive piece for the Vintage VW Club Magazine, it lasted for 4 or 5 issues of the magazine. I don't think I have those issues any longer, but based on those issues I cancelled my membership in that club.

It clearly was "history" as Heinz saw it. It was also apparent to me (at that time) that Heinz had an axe to grind with Porsche, and was quoting un-named sources, heresay, etc. to re-write history as is known and has been covered in many publications by many well respected writers and historians.

At that time I wrote an email to the editor commenting on several of the inconsistencies I noted, and mentioned the un-named sources etc. Their reply was that they felt that I shouldn't quit the club just because of the writings Heinz which they mentioned was his "opinion"..... I don't believe he was the Historian at that time, I think it was still a guy name Cropsey (sp?).

As you read the above piece, you can see the amount of personal agenda he puts into the article, with more un-named sources etc.

Same drivel, different day.

Eric

[onlycafe]

"...went even as far, of having their Brazilian prostitutes disguised as advisors on Volkswagen’s payroll."

who can argue with that?

[dtw]

The real story is the brewing dispute between the Porsche and VW labor unions and their respective representation. There was a really excellent article @ the Spiegel website. Check it out if this topic interests you.

[Aurel]

Now, if they came up with a $20k VW version of the Cayman, that would be cool...

Aurel

[cnavarro]

Isn't that the upcoming Scirocco? :-)

[gtihop]

Originally Posted by RichF

well hopefully VW can go back to what they were good at with the help of porsches control, making lightweight fun cars.... like the mk2 GTI my favorite

Yes! Even better than the mk2 Gti (I have one as well, I love it) is the Mk 1 Scirocco.

[Paulporsche]

Ahhhh...the Scirocco! Had a 78. What a honey.

[gtihop]

Mine was a 79. had 1 wiper and 4 headlights-loved it. If I could find one up here in decent shape it would get a 1.8 Turbo transplant.

[RichF]

Scirocco!!! I got to see a factory turbo one at H20 international 2 weekends ago. It was badass

[oliver88]

It could indeed be a distarction, but it will also likely ensure that Porsche remains independent. And as a side benefit the new Audis and VW's will get a (hopefully) kick in quality and dealer care/image. I have to say, my new Audi A3 is an awesome car.....

[ros74911]

Thanks for the Info, Wayne. I had no idea. That this was happening. I am V-dub fanatic all my life. I had 84GTI, 86Cabrio, 90Passat, and now at 202k and it's still going 99GOLF GLS 2.0 8V. They're really fun car to drive. I really thought that VW owns Porsche. Which in fact it's the other way around. I'm confuse. In my mind VW owns 50% of shares of Porsche. I thought VW was in control of the whole European car industries. They are the Europe's largest selling automobiles of all times. In that case. Is Porsche is bringing out a 30k 911 beater or jack up there prices? Greed can take you high up but you come down hard when it fails. Peace.

[Bill Douglas]

If they can syphon off money from VW to pay for racing development (and the protitutes) it will be a good thing.

[Sean_irl]

Not a good thing for what we value in Porsche (us nostalgic romantics) ..but will be an excellent move for Porsche as a company ..yes...remember Porsche are still a Private company.

Its like watching Le Mans.. I havn't been there since Porsche came 1-2 in 1998. The last year they ran works. But, if I had the choice back in 1994 when Porsche sales were crap and the company was in survival mode...the choice been ....Porsche is dead in 2007 or Porsche is a Fortune 100 company ..i'd take the latter.

Ok, its not the Porsche I grew up with, but they're still around. Hopefully they'll peak and trough and they'll not p155 us off in the meantime.

[Hard-Deck]

Before buying my most loved car, my '83 911 SC, I drove Beetles. I've owned 63/67/71/72. Volkswagen turned its back on classic VW owners and VWOA has had a reputation of being the lowest in customer service in the US. I hope that Porsche's ownership turns that around; however unlikely. It's probably a distraction at best to the company.

[dd74]

I see no problem or issues whatsoever with Piech's efforts. It's just good business. I'd rather have Porsche taking control of VW than what I always thought was the other way around. If at all, this might help resolve questions about VW's quality control. Porsche was last year rated as the best car on the market by JD Power, so such ownership should have many possible benefits.

As to Piech wanting to propagate himself through as many lineages as possible, well, why not? The world could genetically do a lot worse.

[sig_a]

At least Porsche/VW takeover will not suffer the cultural difference between MB and Chrysler. But the VW road will continue to be rough with the emergence of China's auto industry. To a large degree, this union is about protecting the German people's auto industry. Detroit's looking in the same direction. And that's a good thing.