Volkswagen’s former emperor dies

Controversial car industry hard man Dr Ferdinand Piech died in Germany on Sunday, aged 82.

The most influential European automotive executive of the post-1970 era, Dr Piech drove Volkswagen from the edge of bankruptcy to the become world’s biggest car-maker -- first as CEO, then as Chairman of the Volkswagen Group Supervisory Board.

While the Porsche family holding company, Porsche SE, has yet to comment on his death, his wife Ursula has, confirming he collapsed in a restaurant in Rosenheim, a Bavarian town between Salzburg and Munich, on Sunday night and died that night in hospital.

"The life of Ferdinand Piech was shaped by his passion for automobiles and for the employees that create them,” Ursula Piech said in a statement.

“He remained an enthusiast engineer and car lover until the end,” she said, adding that he died "suddenly and unexpectedly”.

He was driven out of his beloved Porsche after a family decision to withdraw from day-to-day operations and he joined the struggling Audi instead, lifting it from a German bit player to outselling Mercedes-Benz by 2011.

Dr Piech became the Chairman and CEO of the Volkswagen Group in 1993, and then when he was forced to retire when he reached 65, he became Chairman of Supervisory Board from 2002 until 2015.

At the peak of his powers he oversaw the Volkswagen, Audi, Seat, Skoda, Bentley, Bugatti, Lamborghini, Ducati, Volkswagen Commercial and Scania and MAN truck brands.

He led a Volkswagen Group comeback in North America and recognised China’s potential before almost any other car-making executive, leading to dominant sales positions of both Audi and Volkswagen there.

He was named the Car Executive of the Century in 1999 and was inducted into the Automotive Hall of Fame in 2014, overcoming dyslexia to achieve it all.

"First and foremost I always saw myself as a product person, and relied on gut instinct for market demand,” Piech wrote in a 2002 autobiography.

“Business and politics never distracted me from the core of our mission: to develop and make attractive cars.”

Dr Piech led a personal life as convoluted as his professional one, with five children from his first wife, the aristocratic Corina von Planta.

He had two more with Marlene Porsche (the ex-wife of his cousin, Gerhard Porsche), three more with former kindergarten teacher (and his own nanny) Ursula and two more illegitimately.

The Closing Of The Book

He withdrew from the Volkswagen Group early in 2015 after losing a Supervisory Board vote when he tried to push out former CEO Dr Martin Winterkorn about half a year before the Dieselgate scandal broke in September.

If he never received royalties from the portrayal of Star Wars’ Darth Vader, he should have.

“If I want to achieve something, I approach the problem and push it through without realizing what’s happening around me,” his autobiography insisted. “My desire for harmony is limited.”

My own experience of door-stopping Piech revealed this to be true, with the Emperor of Volkswagen seeming to calmly delight in festering intrigue, even within his own company.

He was calculating enough that his anger at being door-stopped, even late at night or early in the morning in hotel elevators, never exploded at the interviewer, but was redirected at whomever it was he was intriguing against at the time.

The angrier he became, the more softly spoken and clear eyed he was and he could end even a CEO’s career with a single raised eyebrow of doubt.

Similarly, the words “Salzburg wants” could get the most outrageous project or design approved in Volkswagen’s Wolfsburg headquarters.

Ex-Porsche CEO (and the engineer of Porsche’s ambitious Volkswagen takeover attempt) Wiedeking told German business newspaper Handelsblatt last week that Piech was a "gifted car and engine developer whose attention to detail is limitless.”

He doubted that this was a sensible approach from a CEO, though, and accused Piech of inconsistency in dealing with people.

“It was always a high risk gamble to guess if you had his support," Wiedeking said.

It wasn’t only Wiedeking who felt Piech’s axe. He fired his successor as Audi CEO, Franz-Josef Kortuem, then fired his successor, Herbert Demel. He also pushed a third Audi CEO, Franz-Josef Paefgen, to Bentley, and got rid of Audi’s technical boss, Wolfgang Durheimer, just nine months after placing him there.

He also knifed his hand-picked CEO successor at Volkswagen, former BMW executive Bernd Pischetsrieder, after his protégé tried to restructure the Group, replacing him with another protégé, Winterkorn.

That’s why industry observers unanimously expected some sort of spectacular comeback for Dr Piech, who was famous for divide-and-conquer tactics and having others do his dirty work for him, but it never happened.

Instead, he sold his most of his 14.7 per cent of Porsche SE (which owns 52.2 per cent of the Volkswagen Group’s voting shares) shares to his younger brother, Hans Michel Piech, and redistributed the remaining 4.3 per cent amongst the Porsche-Piech clans in 2017 (to ensure neither clan gained a dominant position) and remained in quiet semi-isolation with Ursula in and around Salzburg since.

It made his brother the biggest single shareholder in Porsche SE with 25.1 per cent, handing him a minority blocking position.

How it happened

Born to Nazi parents, Dr Piech was a child when Germany and his native Austria lost World War II despite his grandfather, Ferdinand Porsche, engineering the Tiger, King Tiger and the 188-tonne Panzer VIII Mouse tanks.

They were big boots to fill, with Porsche also developing the first petrol-electric hybrid car in the world, the Volkswagen Beetle, the Mercedes-Benz SSK and being named Car Engineer of the Century in 1999.

His grandson was sent to boarding school in Switzerland and graduated from the ETH University in Zurich with a mechanical engineering degree, having written his thesis on the development of a Formula One engine.

Piech worked at Porsche from 1963 to 1971 and was criticised by the family for overcommitting the company to his wild, flat-12 917 sports car in 1968, as a brash 31-year-old development boss.

He spent two-thirds of Porsche’s annual motorsport budget just to build the 25 of his 600hp 917s demanded for homologation, surprising the FIA and shocking rival, Ferrari. It became one of the most iconic racing cars of all time.

He started a small consultancy before joining Audi, developing a five-cylinder turbo engine and selling it first to Mercedes-Benz and then again to Audi for the ur quattro.

He delivered the Audi 80 and the innovative 100 aero limousine as well as beginning the ur quattro program in 1977 that changed the World Rally Championship forever.

He was rumoured to have one of the greatest personal car collections in the world, with one-off specials from Porsche, Bugatti, Audi and rival car-makers, along with a host of prototypes that never made production.

His personal engineering fingerprints are on some of the finest cars (in their classes) of all time, starting with his 917 through to the ur quattro, the Audi 100, the first Audi A4, the Bugatti Veyron, the Volkswagen Phaeton and the benchmark Volkswagen Golf IV and V models.

The Veyron was a pet project and he had his-and-hers Veyrons as daily drivers for himself and Ursula.

A cadre of engineers worshipped Piech, and it’s a widely held belief that the Veyron was partly built as a tribute car, to continue some family history with 16-cylinder engines.

Dr Porsche made a supercharged 16-cylinder engine for pre-war Auto Union Grand Prix cars and Piech’s development of another 16-cylinder motor for 1970s CanAm racing was curtailed by the (cheaper) turbocharging of the 917’s flat 12.

The Veyron’s W16 motor developed 1001hp when it was launched and its speed-limiter was set at 407km/h to topple the Le Mans top speed record of the WM-Peugeot’s 405km/h, which itself toppled Piech’s 917.

He drove the rise of Audi from bit player to front-line premium brand. He oversaw the rise of Skoda from throwaway Eastern European dross to a clever volume alternative.

He controlled the rise of platform sharing across his Group’s volume brands to drive down costs. He was obsessive about quality and detailing, famously plying the halls of worldwide motor shows to measure the door and bonnet shutlines of rival cars.

He foresaw the rise of premium cars, pushing Audi upmarket and buying both Porsche and Bentley, and overseeing their move outside their traditional markets with the Cayenne and Continental GT, along with pushing both the Audi R8 and the Lamborghini Gallardo.

He even pushed the engineering of the Volkswagen W12 prototype, which set a 24-hour record in 2001 that may not ever be broken. Despite gearbox concerns, the W12 cranked out 7085.7km of the Nardo proving ground’s high-speed bowl at an average speed (including refueling stops) of 295.24km/h.

When doubts began to arise over the gearbox’s fragility, Piech replied “Wir werden das schaffen, glaub mir [we will do this, believe me],” in a way that left nobody in doubt that the sheer force of his will would hold the car together, mostly because it would be too frightened of his wrath.

His finest hour

Piech was the kind of man that also went against his personal financial interest in 2008 when, as Volkswagen Chairman, he fought tooth and nail against his own family when Porsche tried to take over the volume car-maker.

Piech instigated the greatest short-seller burn of all time after speculators realised just how much of Volkswagen’s shares Porsche had accumulated and jumped on the bandwagon.

He stayed strong until there weren’t enough shares to meet the speculators’ commitments, forcing them to scramble and pay more than €1000 a share, briefly making Volkswagen the most valuable company in the world.

In the meantime, Porsche collected more than €10 billion in debts but, through Piech’s efforts, fell short of its 75 per cent controlling-shareholding target. The Piech-controlled Volkswagen responded by buying 49.9 per cent of Porsche, then buying the rest in 2012 to roll it into the burgeoning Volkswagen Group.

He was an odd mix of raw automotive passion and hard-nosed businessman, with his pet projects among the greatest money-losing production cars of all time (usually because of statement-making over-engineering), including the Audi A2, the Bugatti Veyron and the Volkswagen Phaeton.

The Phaeton’s prospects were probably curtailed by Piech’s own 10-point list of targets, including that it must be capable of driving at 300km/h (though it was limited to 250km/h) all day in 50-degree weather while maintaining a 22-degree cabin temperature. The Phaeton’s boot hinges are still a work of pure art, and its chassis was the basis for the Bentley Continental GT and Flying Spur.

He also pushed the Volkswagen Group to buy Ducati and Lamborghini on whims because he enjoyed riding and driving them, building an expensive factory in Dresden to build expensively engineered Phaetons that nobody bought and losing about €4 million on every single Veyron Bugatti sold.

On the flipside, he burned through Volkswagen Group CEOs mercilessly until, at last, after his famous “I have distanced myself from Winterkorn” comment in April 2015, his power waned.

He had many other moments of forward thinking, including the 3.0-litre Volkswagen Lupo and the all-aluminium Audi A2 that was similarly frugal, though both used harsh-sounding cylinder-deactivation engines to get there in 1999.

He then developed the experimental 1 Litre Auto, a radical internal-combustion, carbon-fibre prototype that used 1.0L/100km on the NEDC cycle, which was followed more than a decade later by the limited-edition XL1 ultra-economy car.

The downsides

His no-excuses engineering attitude, though, created a culture at Volkswagen that lead directly to the Dieselgate scandal that cost the company €30 billion in penalties and settlements around the world and has yet to fully play out.

Not for the first time in a scandal, Piech disciples have been charged over the scandal, including Winterkorn and Wolfgang Hatz. It was also accused of stealing General Motors’ purchasing secrets in the 1990s under his watch, ending the careers of several senior executives, but Piech sailed on serenely.

He was outfoxed badly when he outbid BMW in 1998 when he bought Rolls-Royce from the Vickers Group, but failed to secure the rights to the Rolls-Royce brand.

Instead, BMW picked those up for a relative pittance (£40 million, versus the £430 million Piech paid) from the Rolls-Royce aero company that owned them. The two companies came to an inevitable deal, because Volkswagen bought the Spirit of Ecstasy mascot and the grille, but BMW had everything else (including engine supply).

Volkswagen was left with Bentley (which Piech said he actually wanted all along).

A bigger failing was missing the starter’s gun on SUVs, allowing Volkswagen's and Audi’s German rivals to build two full generations of X5s and MLs before responding with the Q7 and Touareg.