Wednesday 18 September 2019

Obituary: Ferdinand Piech

Autocratic former head of Volkswagen who transformed the almost bankrupt car-maker into the biggest in Europe

Authoritarian: Ferdinand Piech
Authoritarian: Ferdinand Piech

Ferdinand Piech, the former chairman and chief executive of Volkswagen, who has died aged 82, was the grandson of Ferdinand Porsche, the designer of the VW Beetle, Adolf Hitler's 'Car for the People', and son of Volkswagenwerk's wartime manager Anton Piech; many saw him as a chip off the old block.

A brilliant engineer, early in his career in the 1960s Ferdinand Piech helped to design the Porsche 906 and 917 racing cars. Moving to Audi, a Volkswagen subsidiary, he developed the 80 and 100 models, and helped to engineer the celebrated four-wheel-drive Quattro.

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Few people were surprised, when in 1993, he became chief executive of Volkswagen, then on the brink of bankruptcy. Over the next two decades, latterly as chairman, he built the company into the largest car manufacturer in Europe by a substantial margin, rivalling Toyota for the title of largest car maker in the world.

But Piech's management style was not to everyone's taste. German newspapers called him 'Lord of the Manor'; a General Motors executive once called him "quasi-psychotic''. Aggressive, brooding and authoritarian, he ran Volkswagen like a personal fiefdom.

Quick to dismiss any executive who he felt had failed to meet his demanding standards (he boasted of firing any subordinate who "makes the same mistake twice" and was reckoned to have sacked at least 30 directors of Audi and VW), he was accused of promoting a climate of fear that prevented subordinates from openly discussing problems.

This atmosphere arguably facilitated the emissions cheating scandal which, so far, has cost the company more than $30bn in settlements and fines.

Ferdinand Karl Piech was born in Vienna on April 17, 1937. His father, Anton, was then a lawyer; his mother, Louise, was the daughter of Ferdinand Porsche.

Ferdinand Piech recalled, during World War II when his father was running the Volkswagen factory in Wolfsburg, travelling on a train that delivered raw materials to the factory and becoming determined that he, too, would work there one day, "for real, down there, where the workers repaired the aeroplanes and rode the trains, for real, with my hands''.

Some 70pc of those workers, it was revealed in the historian Hans Mommsen's Volkswagen and Its Workers During the Third Reich (1996), were foreign slave labourers, many of whom were beaten or worked to death.

Mommsen's report had been commissioned by Carl Hahn, Piech's predecessor as VW chairman, in an effort to face up to the company's past. By the time the book appeared, however, Hahn had been succeeded by Piech, who complained in the German press that Mommsen had turned the book into an attack on his family, implying that the historian was out to get him.

After the war, Piech read Engineering at the Eidgenossische Technische Hochschule in Zurich, where he wrote a paper on the development of the Formula One engine. Then in 1963 he began his career at Porsche, the sports car company his uncle, 'Ferry' Porsche, had founded after the war.

There, Piech was put in charge of testing and development, earning a reputation for pushing the technical boundaries and developing the firm's first really successful model, the 911.

In 1968 he invested two thirds of Porsche's annual racing budget to build 25 Porsche 917 cars with an untested radical 600 horsepower air-cooled 12-cylinder engine design. Porsche family members accused Piech of irresponsibility, but the Porsche 917 went on to become one of the most successful racing cars in history, winning almost every event it entered in the 1970 and 1971 seasons, including a double at Le Mans.

After leaving Porsche as senior technical director in 1972, following a row with the Porsches, Piech joined the engineering team at Audi, then a maker of staid middle-market saloons. He was the man most responsible for the sporty Quattro, one of the most influential vehicles of the 1980s.

He was also largely responsible for Audi's pioneering work in aerodynamics, and in the use of rustproof galvanised body shells, a first for the industry. His technical wizardry (combined with shrewd marketing) helped turn the Bavarian car maker into a rival to BMW and Mercedes in the luxury car market.

Piech moved to Volkswagen as chief executive in 1993, when the company was struggling to develop new products and making losses. His reputation for ruthlessness was by now well established and, as he observed later in an autobiography, "Only when a company is in severe difficulty does it let in someone like me. In normal, calm times, I never would have gotten a chance.'' Within months, he had sacked almost the whole management board and cut costs by persuading union leaders to accept a shorter working week. Before long VW's losses had turned into profits. His masterstroke was the reinvention of the Beetle as a modern car, making it a big seller in Europe and America.

There followed a series of acquisitions of luxury brands, including Bugatti, Bentley and Lamborghini.

But Piech was not infallible. He failed to tackle overmanning, and his fascination with highly engineered cars created some expensive mistakes, notably VW's Phaeton luxury saloon. He brought in Ignacio Lopez from Opel, a subsidiary of General Motors, who was famous for cutting costs by squeezing suppliers but who was later accused of having stolen trade secrets from GM.

At one point in the mid-1990s GM sought to have VW designated a criminal organisation under the US Racketeer Influenced and Corrupt Organisations Act and demanded up to $4bn in damages. The case was settled in early 1997 after Lopez agreed to resign from VW and the company acknowledged "the possibility" that illegal activities may have been involved.

Piech stepped aside in 2002, having reached the official retirement age of 65, to be replaced by the former chief executive of BMW, Bernd Pischetsrieder. Two years later, VW was engulfed in allegations that executives and trade union leaders had been involved in bribery and corruption, with claims that Volkswagen had even footed the bill for Viagra handed out to union leaders during "lust tours" for sessions with prostitutes. Piech was never charged with a crime, though some of his subordinates were.

Piech, however, retained substantial power as chairman of VW's supervisory board, power which he used in 2007 to replace Pischetsrieder with his protege Martin Winterkorn, a man who seems to have modelled his own management style on that of his mentor. With Piech's backing, Winterkorn announced Volkswagen's ambition to surpass Toyota as the largest car maker in the world.

The following year Piech became involved in one of the toughest battles of his career when, at a time when VW sold more cars in a week than Porsche did in a year, the sports car maker announced plans to buy its bigger rival. As the financial crisis hit, however, Porsche was forced to abandon the bid, and Volkswagen soon turned around and swallowed the smaller company, though the deal left the Porsche family with a majority of VW's voting shares and four seats on the supervisory board. But in a surprise development, in April 2015, Piech was ousted as chairman in a boardroom struggle after he criticised Martin Winterkorn in public, Porsche family members siding with Winterkorn. Five months later the emissions scandal broke.

One of Piech's most important innovations at Audi had been to develop the turbocharged direct injection (TDI) technology which made diesel practical for passenger cars, offering superior fuel efficiency.

Promoted by VW as "clean diesel" engines, TDI engines became standard for models including the Beetle, Golf, Jetta and Passat, cars marketed as smoother and cheaper to run as well as much kinder to the environment than the foul-smelling diesels of old. VW's strategy in taking on Toyota would involve challenging the Japanese company's hybrid technology by converting Americans to the cause of "clean diesel''.

Until September 2015, VW was widely seen as the epitome of German manufacturing excellence. That month, however, it was revealed that between 2009 and 2015 it had sold 11m cars with software deliberately designed to deceive the authorities by producing low emissions in test conditions, then letting cars spew out pollutants up to 35 times higher than US limits. Winterkorn resigned immediately after taking responsibility, while denying personal knowledge of the scam.

So bad were relations between the company and its former chairman at the time the emissions scandal broke, that there were suggestions that Piech had leaked the information to bring Winterkorn down.

Piech had 13 children by several different women. In his autobiography, he revealed that their mothers included his first wife, Corina; Marlene Porsche, with whom he had an affair while she was married to his cousin Gerd Porsche (the cause, some said, of his strained relations with the Porsche family); a woman he did not identify; and Ursula, his family's former maid, whom he married in 1984 and who survives him with his children.

Ferdinand Piech died on August 25, 2019.

© Telegraph

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