At the wheel of a car giant
This week's takeover of Porsche represents the final success of the 20-year campaign waged by VW's colourful chairman Ferdinand Piech.
Following the Porsche acquisition and the purchase earlier this year of Italian motorcycle manufacturer Ducati, VW now owns no less than 12 brands -- equal to the number of children Mr Piech has fathered by four different mothers.
Apart from the flagship Volkswagen brand, the VW stable now also includes Audi, Bentley, Bugatti, Lamborghini, Skoda, Seat, 19.9pc of Japanese auto manufacturer Suzuki, truck makers Scania and Man, and most recently, Ducati and Porsche.
Between them, they produced 8.3 million cars and trucks in 2011, making VW the largest auto manufacturer in Europe and the second-largest in the world. Only General Motors of the US is now ahead of VW in the global rankings.
VW now caters to every conceivable automotive taste and pocket. Heads of state and corporate titans can opt for one of its Bentley limousines; families on a budget a Skoda hatchback; while petrolhead Arab princes are particularly keen on Bugatti's Veyron, the fastest production car in the world with a top speed of 268 miles per hour.
The problem with running such a large stable of brands is how to maintain their distinctiveness while capturing the cost savings that come from sharing floorpans, more efficient purchasing and economies of scale.
Previous multi-brand manufacturers, most notably the pre-Chapter 11 GM and British Leyland, tried and failed to do this. Instead, they opted for "badge engineering" where consumers were confronted by hordes of seemingly identical Oldsmobiles, Chevrolets, Buicks, Cadillacs and Pontiacs.
VW seems to have avoided this trap. It uses its luxury brands such as Bentley to premiere new technology, which then successively trickles down to its Audi premium brand, its mass-market Volkswagen brand and finally to its Skoda budget brand.
Mr Piech is the presiding genius who sits at the top of this enormously complicated corporate structure.
For such a large, capital-intensive industry, one of the most remarkable things about auto manufacturing is how many of the original founding families are still in situ. Ford is chaired by Bill Ford Jnr, Akio Toyoda is chief executive of Toyota, the Peugeot family still control the company that bears their name while the Agnelli dynasty is still very much in the driving seat at Fiat.
So it is with Mr Piech at VW. He is the grandson of Ferdinand Porsche, one of the most brilliant and controversial engineers of the 20th century. Ferdinand Porsche first came to fame when he designed Hitler's "people's car", which became the Volkswagen Beetle. By the time production ceased in 2003 after 65 years, more than 21.5 million Beetles had rolled off the production lines.
During World War Two Ferdinand Porsche designed the Tiger, easily the most lethal tank produced by any of the combatants. During the fierce fighting in the Normandy hedgerows following the D-Day landings, Allied commanders reckoned that, even with overwhelming air superiority, it cost at least five of their Shermans to kill one Tiger.
After the war, Ferdinand Porsche's son, Mr Piech's uncle Ferry Porsche, designed and produced a series of top-of-the-range sportscars, including the iconic 911, which is still in production 49 years after it was first launched in 1963.
Mr Piech joined the family firm the same year after qualifying as a mechanical engineer. However, the various members of the Porsche family, principally Ferry and Mr Piech's mother Louise, did not get on and in 1971 the business, which had previously been a partnership, was restructured and became a public limited company.
As part of the restructuring, Porsche family members were prohibited from being employees of the company and Mr Piech left to join Audi as chief engineer. However, he retained his 10pc Porsche shareholding, something that would later prove to be of crucial importance.
When Mr Piech joined Audi in 1972 the brand, which had been owned by VW for the previous six years, had a decidedly dowdy reputation. Mr Piech, who had specialised in motorsports projects during his time at Porsche, changed all that. He led the team that developed the four-wheel drive Audi Quattro. The rally version swept all before it, winning the World Rally Championship for two years running.
The Quattro transformed Audi's reputation and marked Mr Piech as the coming man at VW. He became boss of Audi in 1988 before taking over as head of the parent company five years later.
However, by the time he succeeded Carl Hahn as chairman of the VW management board in 1993 the company was on the verge of going bust. It was losing money, was over-manned and had lost its once enviable reputation for quality.
Cometh the hour, cometh the man. Even by his own admission Mr Piech was not an easy boss to work for. "It's not possible to take a company to the top by focusing on the highest levels of harmony," wrote Mr Piech in his autobiography. "My desire for harmony is limited."
Under Mr Piech's leadership VW embarked on a string of acquisitions. Czech motor manufacturer Skoda was acquired in stages between 1991 and 2000, Bentley, Lamborghini and Bugatti were all acquired in 1998, Scania between 2000 and 2007, the Suzuki stake in 2010 and MAN in 2011.
During Mr Piech's reign, VW has expanded rapidly into China, which is now its largest single market. In recent years, VW has also rebuilt its position in the key US market, selling 324,000 Volkswagens in 2011, its best performance since 2002, and 117,000 Audis.
In common with all major German companies VW has a two-tier board structure with a management board and a supervisory board.
Mr Piech "retired" as chairman of the management board when he turned 65 in 2002 only to immediately move upstairs to become chairman of the VW supervisory board. In truth, little had changed. Mr Piech, whatever his official title, remained the dominant figure at VW.
Earlier this year Mr Piech was elected for a third five-year term as chairman of the supervisory board, which means that he will stay in charge of VW until at least 2017 when he turns 80.
However, throughout his nearly two decades behind the wheel at VW there was one acquisition that had remained stubbornly out of Mr Piech's grasp. Ever since 2008, Mr Piech has been seeking to combine VW and Porsche. The result has been a convoluted corporate struggle that has split the Porsche family but which finally resulted in victory for Mr Piech this week.
In 2009, Porsche bid for VW only for the deal to fall apart at the last minute when it couldn't raise the necessary financing. However, the attempted 2009 takeover left Porsche with a 50.7pc shareholding in VW while VW had a 49.9pc stake in Porsche. Now VW has agreed to pay €4.5bn for the remainder of Porsche. The net effect is that Porsche, a much smaller company, ends up with effective control of VW.
The deal further narrows the gap between VW and GM at the top of the global auto league table. Having finally achieved his life's ambition of bringing together the two automotive companies founded by his grandfather, the onus is now on Mr Piech to make the merger work.