I honestly don’t know what to make of this story. Porsche, as we reported two weeks ago, was about to sell its sports-car business to Volkswagen, then denied it. Yesterday, the two families that control the companies announced they had a deal to merge them, with Porsche remaining “independent” and issuing stock to help pay down its corporate debt of some $12 billion.
The financing and other details have yet to be revealed, so this Porsche story is really just a teaser. What we do know is that Wolfgang Porsche (Porsche board chairman) and his cousin Ferdinand Piëch (VW’s chairman) have been feuding for years, but finally (pending another denial) have come to some kind of agreement, which in turn is pending approval by the workers’ union and the state of Lower Saxony, which owns 20 percent of VW.
The family history is fascinating:
Piëch’s grandfather, Ferdinand Porsche, was behind Hitler’s People’s Car, eventually to become the VW Beetle. Post-Second World War investigations into links between the Nazi regime and Ferdinand Porsche, his son Ferry, and son-in-law Anton Piëch, created an uneasy tension within the family.
The Porsches and the Piëchs settled in Austria, hand-building sports cars and creating a distribution network for VW cars. After his schooling in Switzerland, Ferdinand Piëch joined Porsche as an engineer, and in the 1960s designed the company’s ground-breaking 917 racing car.
Aggressive, brooding, but above all strong-willed, Piëch rose to become an influential figure in Europe’s motor industry, and few people were surprised when in 1993 he became chief executive of Volkswagen. But his management style was not to everyone’s taste. German newspapers called him “Lord of the Manor.” A General Motors executive called him “quasi-psychotic.”
What’s interesting beyond the family drama is the present push to combine, á la Fiat, and create a ten-brand car-making enterprise that would be one of the world’s largest. I can think of only eight, however: Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Skoda, and VW. Take that, Marchionne!
What does it all mean? Too soon to tell, but clearly the U.S. is selling brands; the Europeans are buying them. Carmakers are looking for scale, even as the industry contracts. If you can make sense out of these contradictions, please leave us a comment.
Will the Porsche-VW deal be a good one for car buyers?