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Piech Retiral ends the era of the “Automobile Czars”

Date:5Minutes ago Authour:Li San

Li San: Chief Commentator of Sanlian Life Weekly and Special Commentator of China Auto

Piech Retiral ends the era of the “Automobile Czars”


Today, Ferdinand Piech celebrated his 80th birthday. Born on April 17, 1937, he was named after his grandfather Ferdinand Posche - the designer of the Beetle and later the chief design of Volkswagen. Volkswagen was founded in 1938, which means Piech was a year older than even Volkswagen. The Austrian ruled Volkswagen for no less than 23 years, and that is the story I am going to share with you today.

Piech Retiral ends the era of the “Automobile Czars”


When Piech was still a child, his grandfather Ferdinand Posche loved him very much, far more than his Porsche grandsons.  

Piech graduated in 1962 from the ETH Zurich in Switzerland with a degree in mechanical engineering, having written a master’s thesis about the development of a Formula One (F1) engine. From 1963 to 1971 he worked at Porsche in Stuttgart on the development of the Porsche 906 and its successors that ultimately led to the successful Porsche 917. Later he joined Audi. Under his leadership, Audi spent a huge amount of money developing the 1000HP Le Mans Racer, which won a lot of championships.

The young Piech was aggressive and restless in his working life and was also rebellious in his personal life. He had an affair with his brother’s wife and married her. Later he left her and fell in love with a baby-sitter working in his house at that time – a beautiful private tutor who is now his current wife. Because of this, Piech was almost thrown out of the family (the above information comes from the Biography of Piech).

But this crazy car-lover never had any trouble finding a job. After the affair with his sister-in-law, he worked for a while for Enzo Ferrari, an old friend of his grandfather. Later he got a job developing diesel engines in Mercedes Benz. After that he joined Audi, and began his career in professional automobile management. In 1993 he succeeded Carl Hahn as Chairman of the Board of Management at Volkswagen AG; this was the start of his 23 glory years at Volkswagen.

Piech Retiral ends the era of the “Automobile Czars”


He was always driven to realize his grandfather Porsche’s dream, which was to build an automobile empire covering all types of vehicle, from 0.5L motorcycles, up to 20-ton trucks. During his time at Volkswagen as Chairman of the Board of Management and Chairman of the Supervisory Board, he realized that dream – indeed he even surpassed it. In the two-wheeled world, Volkswagen owns the Italian motorcycle brand Ducati; in the luxury car field, it has Audi and Bentley; for sports car brands, it has Porsche and Bugatti; for mass-produced cars, it has Volkswagen, Skoda and Seat; for commercial vehicles, it has Volkswagen T; for trucks, it has Scania; and for buses, it has Mann. Other services include Volkswagen finance and car rental services.

A reporter once asked Piech how many car brands he wanted to collect, and he answered “I have 13 children, but Volkswagen only has 12 brands.” In other words, for him there was no finale in his pursuit of this car empire dream.

Piech Retiral ends the era of the “Automobile Czars”


Objectively speaking, Volkswagen AG under Piech’s leadership really scored some brilliant successes. He was not merely a “Car Czar” in name. But since 2007, when he placed his confidant Martin Winterkorn in the post of Chairman of Volkswagen, the car giant has been in an era of the “rule of man”. Whenever a mid-level or senior manager was called to the Chairman’s office, the alarm bells would start to ring – nobody knew what was going to happen next. At every international auto show, every director in charge of a brand was obliged to respectfully accompany the Piechs to visit his booth, because the slightest furrow on the brow of Piech could cause a brand chairman to lose his job.

Piech and Winterkorn’s zealous pursuit of technology put a lot of pressure on their R&D people. In Volkswagen, there is no target that cannot be met. Whatever the leaders say is the command, and it must be achieved within the allotted time no matter how much money and manpower it might cost. Under this kind of pressure it is hardly surprising that Volkswagen was later caught up in the diesel emissions scandal.

Piech Retiral ends the era of the “Automobile Czars”


To date, the scandal has cost Volkswagen more than 20 billion USD, and it has not yet run its course. There were multiple factors that led to the scandal, but the involvement of family members in the direct management of the company is the biggest lesson to take away.

From the day he took over as Chairman of the Board of Management in 1993 to the day he resigned from the supervisory board in 2015, Piech ruled supreme over Volkswagen. In the last year or two, he even put his wife, who was only a preschool teacher, on the supervisory board as the vice chairperson. There has long been discontent in the German media with Piech’s management style and his personnel dealings.   

In April 2015, the shocking statement in which Piech “distanced” himself from Winterkorn was the precursor to the emissions scandal. At first everyone thought Piech was simply indulging his penchant for harsh words, but later people began to realize that he really meant it. This sparked a power struggle to defy Piech and back Winterkorn in Volkswagen, which ultimately led to Piech stepping down from the supervisory board. But, as the largest shareholder of the Porsche/Piech family, Piech was not prepared to simply admit defeat and walk away.  

Piech Retiral ends the era of the “Automobile Czars”


In September 2015, the emissions scandal gave Piech his chance to take revenge. At the beginning of the year, while being questioned by the prosecutor of Sachsenhausen, Piech told him, “A long time ago I warned the chairman of Volkswagen and the vice chairman of the supervisory board, as well as the head of the Porsche family, about problems with the diesel emissions of Volkswagen vehicles in the U.S., but they just didn’t listen to me. Now they are refusing to even admit that I gave them that warning.”

On hearing this statement, his cousin Wolfgang Porsche could no longer keep his silence. Confronted by the German media, he made it clear that he could not choose his relatives, but that he would no longer so much as stay in the same room with Piech. When Piech heard about this he was furious, and threatened to sell his shares in Volkswagen. The Porsche/Piech family immediately convened a family meeting and finally agreed to raise the money to buy Piech’s shares. It has long been a family rule that if any member wants to sell his or her shares in Volkswagen, other family members have first refusal. In the end, Hans Michel Piech, a younger brother who is a very successful lawyer in Vienna, bought Piech’s shares and took over from him as the largest Volkswagen shareholder in the family.

On April 3rd, Porsche Holding announced that Piech had reached an agreement with the Porsche family to sell his 10.4% shares to his brother Hans Michel Piech and the other 4.3% to other members of the family. As a result, Hans Piech held 25.1% of the shares in Porsche Holding.

Piech Retiral ends the era of the “Automobile Czars”


Hans Michel Piech made an agreement with his cousin Wolfgang Porsche that from then on, Porsche/Piech family members would no longer directly participate in the business management of the company. As Wolfgang put it: family members are not willing to take orders from each other, and if we can’t manage the company properly, we should hire others to do it for us. One member of the family sitting on both the management and the supervisory boards won’t work, and could even lead to disaster.

And with these final words, let us wish Piech a happy 80th birthday!

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