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German Motor Industry - Dr. Ing. H.C. F. Porsche Ag: WTF?

Matt Davis
Dec 1, 2009 SHARE

There I was, in idyllic southern Germany, skirting the edges of Austria in the new Porsche Panamera S, 4S, and Turbo, and loving each and every minute of it. Meanwhile, back in downtown Stuttgart, Porsche's now ex-wunderkind leader Wendelin Wiedeking was having increasing trouble chest-thumping up to King Ferdinand Piëch and his fire-eyed forces from Wolfsburg.

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What has happened in a world where Plan A is Porsche Holding taking over Volkswagen Group and then Plan B is Volkswagen Group taking over Porsche Holding? Never seen anything quite like it.

German executives are only slightly less personally hurt by outside company takeovers and the inevitable executive redundancies than their Japanese counterparts. Pride is huge in an intensely hierarchical system of doktors and professors that descends into the dark backroom arts the deeper one tries to dig. Few choose to speak openly and cloaked encounters in underground parking complexes are not such a ridiculous thought. This recent battle royal between elder King Ferdinand and eager Prince Wendelin really brought all of this boiling to the surface for all to see. The German press dealt with the story gingerly because they, too, are scared stiff by these guys. So is the German government.

Lesson one: No one messes with a pissed-off Ferdinand Piëch. His real age is immaterial but he is definitely over 300 years old and is not set to ever die.

Then came the uppity, successful Wiedeking, who was getting really tired of being the number-two dude in German industry for so long. The overarching dynamic became old crafty management under Lower Saxony and the Piëch dynasty vs. new cocky management under Herr Wiedeking and his new-money allies. For a while it seemed as though Porsche was a shoe-in, and even Piëch was indicating acceptance of the inevitable. Then the world economy tanked, Volkswagen shares skyrocketed to Google heights, the Wolfsburg company proved the most ready for the apocalypse, and Porsche's capital investment turned swiftly into pure unpayable debt.

Early in 2007, when the world's speculation-based economy was still rocketing along in its blissful artificial worth, profits-mad Wiedeking surprised all of Earth with his move to take over then-hurting Volkswagen Group, upping his stake to over 30 percent. David was taking to Goliath, and we were all thrilled.

Porsche Holding continued bobbling along with optimistic announcements that it would inevitably own more than 50 percent of VW, and then 70 percent, and then eleventy million percent. Part of that came to be, but the rest never will since Porsche's timing on all this could not have been worse even in its wildest dreams.

I chatted recently with an anonymous source and we were speculating when exactly Wiedeking would resign and stop the bleeding from his stellar reputation as the man who created the world's most profitable car company from the ashes of the early 1990s. And just as this became the leading question of the VW-Porsche situation, the renowned prince smartly stepped down-but believe me, we have not seen the last of Wendelin.

As for recent product, I and many others will never wholly embrace the new Porsche direction. On the other hand, I'm not going to cling to thoughts that the last real Porsche was the first 911 RS. We just have to accept the best of what Cayenne and Panamera bring to Porsche: good sales figures, high profit margins, high quality, and a new customer base that will only grow larger once the Great Recession has run its course.

Talking with aftermarket houses like TechArt and Gemballa, their hearts remain rooted firmly in the 911 range of upgrades certainly, but nearly three quarters of their profit are due to lie in Cayenne and Panamera treatments. We may not have imagined this happening, but Porsche's money people and product planners did.

Will Porsches start carrying more VW parts? Absolutely, so get ready for the whining chorus to swell for a whole new batch of reasons. But I see nothing so sacred that some brilliant VW engineer can't improve upon. They are geniuses not of this world.

On the other hand, will anyone fess up to what exactly is getting swapped out here and there along the way? Probably not.

And so now VW comprises 10 companies, and it will eventually sell more cars and trucks worldwide than anyone, anticipating Martin Winterkorn's bold sales vision by a few years at least.

In future books on the Porsche company, scribes will chronicle this chapter in Zuffenhausen history with something like, "As the 21st century gained steam following a challenging economic era that absorbed many weaker nameplates, Porsche AG and the Volkswagen Group came to amicable terms for a joint corporate entity that would prove the envy of the industry." And everyone at the new company will spend a lot of time avoiding questions about the 17 percent of shares in said new company-hinted to be named Auto Union-now owned by the emirate of Qatar.

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