Wiedeking woes at Porsche

Who is going to the biggest loser if the anticipated demise of Porsche chief executive Wendelin Wiedeking comes to fruition?

The man who refocussed Porsche model strategies after taking on the chief executive role in 1993 is reportedly due to step down following the failed Volkswagen takeover that cost the company almost A$24 billion (more here).

Despite having a majority share in VW, Porsche was left with no controlling interest in the company due to a special German law that gives the state of Lower Saxony -- which owns a 20.1 per cent stake of VW -- power of veto over corporate decisions.

Now the tables have turned and VW is said to be on the brink of taking over Porsche's sports car manufacturing arm, Porsche AG.

And the washout could be that Porsche will lose the man to which it arguably owes its existence.

Wendelin Wiedeking started his career as director's assistant in production and materials management at Porsche, leaving the company in 1988 for a five-year stint with Glyco before returning as chief executive in 1993.

At the time Wiedeking stepped into his new role, Porsche was blundering along in a seemingly confused state.

Present and future model strategies were drifting away from traditional values and the company seemed at risk of becoming just another prestige sports car maker. Bankruptcy loomed.

It was in this climate that Wiedeking turned the company around by reinstating the core values that had made Porsche unique in the rarified air of expensive sports cars.

During Wiedeking's reign, the 911 series moved into an all-new generation that embraced and expanded on the traditions of the past, while the mid-engined, two-seat Boxster and the Cayenne SUV were added to Porsche's range. The Boxster gave birth to the Cayman in 2006 and, just this year, the four-door Panamera (that is said to underpin the next generation Cayenne) was launched internationally (more here).

The success of the model lineup, including the Cayenne that initially drew criticism for being outside Porsche parameters, speaks for itself.

Wiedeking steered Porsche into the position where it could claim to have the highest profit margin in the industry, ramping up international sales accordingly.

Adequate returns for a remarkable performance have placed Wiedeking in the role as Germany's highest-paid executive with a reported pay packet of A$133 million in 2008, earned partly because his contract gives him 0.9 per cent of the company's pre-tax profits.

It is also reported that, even if Wiedeking does go, the company will be obliged to pay out the rest of his contract, which doesn't expire until 2012.

Reports claim Porsche is currently in debt to the tune of A$15 billion and recorded a pre-tax profit of a similar amount for 2008.

The question of where a no-Wiedeking Porsche would be today remains. Looking at the fate of other once-revered brands such as Jaguar, Lotus and MG could provide some sort of guide.

And what are some of the potential outcomes of VW having a controlling interest in Porsche? Even before current events unfolded, cooperative efforts between the companies produced the Cayenne/Touareg virtual twins. Could, for instance, a no-Wiedeking, VW-controlled Porsche consider the possibility of a re-badged VW Caddy?

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