Volkswagen is struggling. The diesel emissions scandal, slim profit margins and a leadership shake-up have challenged the automobile company. SPIEGEL sat down with senior members of the family, Wolfgang Porsche and Hans Michel Piëch, to discuss the path out of the disaster.
Interview Conducted by Dietmar Hawranek and Armin Mahlel
Vehicles at the Volkswagen factory in Wolfsburg
The Porsche and Piëch families are a dynasty. And like most dynasties, they are rich, powerful, secretive — and withdrawn.
Most members of the two families don’t go looking for attention, but one of them, Wolfgang Porsche, known as Wopo, will occasionally make a foray into the spotlight. Often, he displays a light sense of irony, such as when he ran into senior VWmanager Herbert Diess at the Paris Motor Show recently. “I just ordered a Volkswagen Up,” Porsche said. ”It won’t be enough to bail us out,” Diess responded with a wry smile. Porsche: ”Okay, let’s call it a partial bailout.”
His cousin, by contrast, Hans Michel Piëch, is largely unknown to the general public. Indeed, he is able to wander through motor shows in Paris, Geneva or Frankfurt with his daughter without being approached by journalists or other curious onlookers.
The two of them, though, Wolfgang Porsche and Hans Michel Piëch, are now the two most important people on VW Group’s board of directors after Ferdinand Piëch, who led the automobile empire for decades as chief executive and, later, as chairman of the supervisory board, was forced to step down last year. His attempt to get rid of then VW head Martin Winterkorn in April 2015 was never forgiven.
At the time, the family seemed divided and it remained unclear who held the reins after the powerful Ferdinand Piëch’s resignation. It was also unclear the extent to which he still held influence. And even as the questions swirled, the Dieselgate affair — the discovery that VW had intentionally programmed diesel vehicles to deceive emissions controls — was plunging the company into the biggest scandal in its history.
As such, the joint interview that Porsche and Piëch gave to SPIEGEL in Salzburg can be read as a signal that the families are not estranged, that they are steering the corporation through this crisis together.
The families own more than 52 percent of the VW Group’s voting shares, making them the most influential families in the German auto industry apart from the Quandts. There is, though, a notable difference: At BMW, two family members, Stefan Quandt and his sister Susanne Klatten, own 47 percent of the company’s common stock. They alone must agree on important decisions. When it comes to Porsche and Piëch, by contrast, that number is currently eight, and in the next generation it will be 34. If there are differences of opinion about important issues, such as who should become the next chief executive, it can freeze up the entire Volkswagen Group.
Together, the families are the biggest stakeholders in the company, far larger than other stake holders such as the German state of Lower Saxony and Qatar. And contrary to popular belief, the families emerged victorious from the takeover battle between Porsche and Volkswagen.
When the conflict began in 2005, the Porsche and Piëch families owned all of the common stock of Porsche, which was swallowed by Volkswagen and is now merely one of 12 brands under the umbrella of the Wolfsburg-based company. But the families now have a majority of the voting shares of the VW global corporation, making the dynasty more rich and powerful than ever before.
One might think the Porsche-Piëch family would be quite happy — if not for the several conflicts over the course of the last several decades.
Things first got heated in the early 1970s, a time when four family members worked in Porsche management and disagreed to such an extent about the company’s direction that they brought in a group therapist. After the first session it became clear: The damage could not be repaired. It was then decided that, for the good of the company, all family members would be removed from Porsche management.
Only one member of the clan continued to pursue a career in the automobile industry: Ferdinand Piëch, first at Audi, then at Volkswagen. He pushed expansion forward, investing in Scania, MAN, Ducati, Bentley and Bugatti. And if there were conflicts between him and the other family members, Hans Michel Piëch and Wolfgang Porsche searched for a solution, often on joint trips to the US, where both sat on the board of directors of Porsche Cars North America.
Shortly after the two took over the role as leaders of the families last year, US authorities uncovered the VW diesel scandal. It was a challenge for the supervisory board and for the families, who faced accusations that they had lost control. Essential decisions made by the supervisory board a re still being criticized.
Why, for example, are Matthias Müller and Hans Dieter Pötsch, two long-term company managers, now the chairman of the board of management and the supervisory board chairman, respectively? Are they really the right people to turn the company around? Why did the board collect millions in bonuses, despite the billions in losses? Most importantly, how do Wolfgang Porsche and Hans Michel Piëch intend to fill the gap left by the departure of Ferdinand Piëch?
In the past, the two preferred to provide written answers to reporters’ questions. But they sat down for an interview with SPIEGEL at Porsche Holding in Salzburg. A bust stood on a sideboard: Ferdinand Porsche (1875 to 1951), who once laid the cornerstone for the car dynasty, peered over the shoulder of his two descendants.
SPIEGEL: Mr. Porsche, Mr. Piëch, was it a difficult decision to sit down for a joint interview — one Porsche and one Piëch?
Porsche: That’s a typical SPIEGEL question. You think that our families have nothing better to do than constantly fight with one another. That’s nonsense. Of course we don’t always share the same opinion. But we talk long enough until we find a common position, which we then support together. On the long term, that has been very successful for the company.
Piëch: Look how Porsche Holding developed in Salzburg and Porsche AG in Stuttgart. In 1993, Porsche AG was in a critical state. Many people didnt believe the company had a future. Back then, we laid the foundation for the rise of Porsche.
SPIEGEL: In typical SPIEGEL fashion, we would like to ask you about current problems. Your families are the largest shareholders of the Volkswagen Group, which is currently embroiled in the biggest crisis in its history. What went wrong?
Piëch: One needs to make a distinction here. When it comes to the diesel affair, it’s about the legal and technical questions that must be resolved in order to recoup the resulting financial losses and win back the trust the company lost. Then there’s the issue of Volkswagen. The brand needs to be much better prepared for the future, and we needed to reorganize the leadership of the company after my brother Ferdinand stepped down as chairman of the board and Martin Winterkorn stepped down as CEO.
Porsche: After the departures of Ferdinand Piëch and Martin Winterkorn, the first priority was that of finding the best people for the CEO and chairman of the board positions.
SPIEGEL: When the diesel affair became public, Winterkorn was urged to resign by others — by IG-Metall’s Berthold Huber, Bernd Osterloh of the works council and Lower Saxony Governor Stephan Weil. But you wanted to keep him?
Porsche: We weren’t the only ones. At first, everybody thought that Mr. Winterkorn’s contract should be extended. The board ultimately adopted the position that an extension in this situation wouldn’t have made sense. I personally advised Mr. Winterkorn not to seek a contract extension, because he potentially would not have received enough votes. After that, he said of his own accord: I’m taking on the political responsibility.
SPIEGEL: In the midst of the company’s biggest crises, the Porsche and Piëch families were barely visible in public. It looked as though the employee representatives and the state governor had taken over control.
Piëch: It might have seemed like that from the outside. Decisive, though, was the fact that we brought in a CEO, Matthias Müller, who has the competence to solve problems and lead the company.
Porsche: Following intense discussions, we always agreed about the way forward. But politicians need to explain themselves more in public. As a family, we are more reserved when it comes to public comments.
SPIEGEL: The families couldn’t even agree on a chairman of the supervisory board, which is why Huber, the union leader, had to take over the job. It looked like you were unable to take action.
Porsche: We didn’t want to act spontaneously, but sought to make a well thought-through decision. We were always able to act. The employee representatives wanted me to take over as chairman of the supervisory board, but I didn’t want to. For that reason, I was pleased that Mr. Huber made himself available and took on the position until we could reach a new decision.
Piëch: The impression of a vacuum might have stemmed from the fact that my brother played a very different role from that of a normal supervisory board chairman. He had spent many years as chief executive and he is an exceptional engineer. He had a unique approach to the company and was extremely interested in daily operations.
SPIEGEL: He exerted influence over the models and the engineering, down to the details. For example, he once wanted a change to be made to the shape of the hood for the Porsche Macan.
Piëch: We are different and we see our role as family representatives differently. Our basic position is: The management board makes proposals. When they make sense, we will go along with them. We don’t intervene in daily operations. Our most important task is finding the right people to lead the company and then to allow them to do their work.
SPIEGEL: For that to happen, the families first of all need to be in agreement. Ferdinand Piëch wanted Wolfgang Reitzle, the former manager of BMW and Linde, to take over as chairman of the board. Instead, you went with VW chief financial officer Hans Dieter Pötsch.
Porsche: Mr. Reitzle is an excellent engineer. We’ve known each other for many years. But a deep understanding of the company is an important prerequisite for being a strong chairman of the board of the Volkswagen Group.
SPIEGEL: That understanding of the company can, however, also be a burden, given that Mr. Pötsch may also have been involved in all of the things that are now being cleared up. As such, it seems like an obvious decision to bring in someone from outside, someone who is untainted.
Piëch: That may look obvious, but we have always had success by installing people from within the company into leadership positions. We have a lot of trust in Mr. Pötsch.
SPIEGEL: Mr. Pötsch must decide whether damage claims stemming from the diesel affair should be made against a company leadership to which he once belonged. That is a classic conflict of interest.
Piëch: There is no conflict since it is a decision that must be made by the entire supervisory board. Such decisions are made free of conflicts of interest.
SPIEGEL: As chief financial officer, Mr. Pötsch was responsible for keeping the German stock exchange informed. There are damage claims that accuse VW of informing the public too late. As chairman of the supervisory board, Mr. Pötsch must now scrutinize his own work as chief financial officer. How is that supposed to work?
Porsche: The Volkswagen Group has a clear legal position on that, and we stand fully behind Mr. Pötsch.
SPIEGEL: Your decision to install Matthias Müller as CEO was just as controversial as the decision to appoint Mr. Pötsch. He previously held senior positions at Audi, VW and Porsche. How can he be a credible figure to lead the company out of the crisis?
Porsche: We need to look ahead, and for that we need somebody with the requisite abilities. In our view, Mr. Müller has them to the highest degree. For that reason, there was little discussion about the appointment of Mr. Müller, and this decision has proven to be the correct one.
Piëch: Of course, the diesel affair needs to be cleared up. That is the job of the Jones Day law firm, which is working completely independently. And if consequences must be drawn, then they will be drawn. On the other hand, though, we need to lead the company into the future. To do that, we need our best manager.
SPIEGEL: As members of the supervisory board of the VW Group, you are responsible for another controversial decision: Members of the VW management board received bonuses despite the diesel scandal. Could it be that you two — wealthy people who live in Salzburg — might not realize what that looks like from the outside?
Porsche: Actually the board did forego a few things. I would have preferred it if flexible remunerations had been completely abandoned at that moment.
SPIEGEL: Why didn’t you insist on your position?
Piëch: According to their contracts, the board members had a right to a bonus. That clause was not tailored to a case like the diesel affair. A part of the bonuses is tied to returns from the past four years. A bad year lowers the bonus, but it doesn’t bring it down to zero. But I will admit you are right: When it comes to outward appearances, it would have been better had the board waived them. Mr. Pötsch has addressed the issue and is working on a new regulation.
SPIEGEL: Its still unclear how much the diesel scandal will cost: 20, 30, perhaps 50 billion euros. Is it possible that the VW Group will list parts of the company on the stock exchange in order to raise money, like Audi, for example, or Porsche?
Porsche: From today’s perspective, there is no need for that. I trust that the measures that have been initiated will be successful.
Piëch: I am convinced that solutions will be found that are tolerable for the company. We will manage this. The Group, after all, isn’t just Volkswagen. Skoda, Seat, Porsche, Scania, to name just a few brands, are doing quite well. But of course, the situation remains quite serious.
SPIEGEL: The Volkswagen brand doesn’t just have to deal with the consequences of the diesel scandal. With its high costs, it is not competitive. But how will it be able to cut costs when Lower Saxony and the employee representatives on the supervisory board can block everything?
Piëch: Everybody can see that plenty must be done. Volkswagen can’t keep working with its slim operating margin. The brand needs to become more efficient and profitable in order to be successful in the future.
Porsche: All car makers, including Daimler and BMW, have to invest more than ever before — in electric vehicles, in digitalization, and much more. If you want to have secure jobs, there has to be sufficient liquidity. Otherwise, you’ll be facing massive problems.
SPIEGEL: Does Osterloh, the head of the works council, see it the same way?
Piëch: Mr. Osterloh has an excellent knowledge of the company. He sees the economic problems and challenges. For him, its about the welfare of the company, as it is for us.
Porsche: Of course, the works council and the state of Lower Saxony don’t take things lightly, and neither do we, when jobs are at stake. We will try to make things as tolerable as possible, with early retirement and other measures. But we can’t do things as they were done in the past, when 3,000 people were sent into early retirement and afterwards 3,000 new employees were hired.
SPIEGEL: Workers say that job security should be just as important to the company as adequate returns. Do you see things the same way?
Piëch: I see things very simply: If the business is not functioning, it makes little sense to talk about jobs. Volkswagen needs to lower costs. Mr. Diess, the head of the Volkswagen brand, has already done a lot in that regard. I have the feeling that things are going in the right direction.
SPIEGEL: Mr. Diess is constantly doing battle with Mr. Osterloh. How long will that situation continue?
Porsche: We will give Mr. Diess our full support, just as we support all of management. I was at the Motor Show in Paris and it’s been a long time since I’ve seen a presentation as excellent as Mr. Diess’ of the electric car. It is impressive what Volkswagen has managed to do in such a short amount of time.
SPIEGEL: Are you excluding the possibility of layoffs or plant closures?
Porsche: That is something the board needs to negotiate that with the employee representatives. We have full confidence that the best solution will be found here, and of course it is always better if layoffs can be avoided.
SPIEGEL: The supervisory board of the VW Group includes politicians, works council representatives, the Porsche and Piëch families as well as Qatar. Among this group, not a single one has experience leading an industrial company, with the exception of Mr. Pötsch and his conflicts of interest. Why do you forego the expertise of specialists?
Piëch: Porsche AG in Stuttgart and Porsche Holding in Salzburg, the largest automotive distributor in Europe, are highly successful companies. That would not have been possible without our expertise.
SPIEGEL: But Porsche was a large mid-sized company with 10,000 employees. VW is a global corporation with over 600,000 employees and 12 brands.
Piëch: These are all car companies. Of course politics play a bigger role with large corporations. But in the final analysis, the tasks facing the supervisory board are the same. Porsche AG in Stuttgart is strongly driven by engineering, by new Porsche models. And Porsche Holding in Salzburg is a distribution company, technology and distribution are central for the long-term success of a business.
Porsche: We have been working in the automobile industry for a long time, half of a century, in principle since early childhood. I myself worked in sales at Daimler, I led a Yamaha import business and have been on the supervisory board at Porsche and Salzburg’s Porsche Holding for a long time. So you can believe us when we say we know something about the automobile industry.
SPIEGEL: Still, one gets the impression that familial ties are more important than expertise. You are placing increasing numbers of your family members on the supervisory boards of the Group and of the individual brands. Does the family have precedence?
Porsche: It is certainly not a driving principle.
SPIEGEL: Your generation, the third one, had eight members. In the fourth generation, there are 34. If it’s difficult now to get everyone on the same page, how will it work in the future?
Porsche: Not all 34 will be able to join the supervisory boards and be part of the conversation, and not all of them will want to. What’s important is that in the next generation, suitable family members take an interest and don’t simply wait to receive the dividends. Several of them are already on the boards of various company brands. We organize meetings in which they report on their experiences in order to see how they are doing. In our experience, that is the best way. Several will prove to be well-suited.
SPIEGEL: Who decides?
Piëch: There are eight people in our generation. And now we are both sitting across from you. I think it’s possible to find the right solution. In the next generation, there are enough people who are interested, who want to carry on what we have done thus far.
SPIEGEL: What happens if some of them want to cash out and sell their shares?
Porsche: This question is given too much attention. My children are sticking with the company. I am convinced that the other members of the fourth generation will do the same, and I don’t think that the younger generation is only interested in quick money. We have also established an arrangement in the family that family members, in such cases, have preferential right (to buy the stock another family member may be selling). The shares of the Porsche Automobile holding SE won’t just simply end up with a Chinese car manufacturer or at a hedge fund,
SPIEGEL: Ferdinand Piëch has said he is in favor of the families buying up Qatar’s shares of the VW Group. When he didn’t get majority support for that plan, he is said to have threatened to sell his shares. Does he want out?
Piëch: That’s speculation. You’d to ask my brother himself. But I don’t believe it.
SPIEGEL: What role does Ferdinand Pietch play at this point?
Porsche: He is on the supervisory board of Porsche SE, but otherwise he’s not on any other boards.
Piëch: He is still interested in the company, it’s his baby. He even buys cars from other manufacturers in order to see how good they are compared to our own.
SPIEGEL: Ten years ago, you owned Porsche, a successful sports car company, and could enjoy life. The turbulence began with the VW-Porsche takeover battle: Countless damage claims, the fight between Ferdinand Piëch and Winterkorn, the diesel scandal have followed. Do you sometimes yearn for the old times?
Piëch: In the end, we made the right decision back then: Porsche couldn’t have made the large investments into electric mobility and digitalization on its own.
Porsche: The Porsche era was nice. But we shouldn’t look back. We will do everything in order to bring Volkswagen back onto the path of success.
SPIEGEL: Mr. Porsche, Mr. Piëch, we thank you for this interview.