Dr. Ferdinand Piech Resigns from the Volkswagen Board

Over the last couple weeks there has been a flurry of rumors, news reports, quotes from Volkswagen board members and lots of speculation by today’s wonderful media that seems more bent on finding something meaty to talk about than actually reporting facts. It started with a quote in German publication Der Spiegel that Dr. Piech, a long standing board member of Volkswagen Group, no longer had faith in Dr. Martin Winterkorn, the CEO of Volkswagen, to lead the company. This in turn lead to several other board members and the German metal workers union to throw their public support behind Dr. Winterkorn. Dr. Piech gave no specific reason why he doubted Dr. Winterkorn’s ability to lead the company in the Der Spiegel interview. However, that didn’t stop the press from speculating on a wide variety of potential reasons with no real basis in facts. In the end, Dr. Ferdinand Piech abruptly resigned this past weekend from his position as a supervisory board member with Volkswagen Group and thus ended a very interesting era in VW’s history.

Volkswagen of Germany released this very short and direct official statement today:

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The Executive Committee of the Supervisory Board of Volkswagen AG discussed again today in detail the situation of the Volkswagen Group.

1. The members of the Executive Committee have unanimously determined that in view of the background of the last weeks the mutual trust necessary ‎for successful cooperation no longer exists.

2. For this reason Professor Dr. Ferdinand K. Piëch has resigned with immediate effect from his position as Chairman of the Supervisory Board and from all his mandates as a Supervisory Board member within the Volkswagen Group. In addition, Ms. Ursula Piëch has resigned with immediate effect from all her Supervisory Board mandates within the Volkswagen Group.

3. The position of Chairman of the Supervisory Board will be temporarily assumed by the Deputy Chairman Berthold Huber. Mr. Berthold Huber will chair both the Supervisory Board meeting on May 4 as well as the Annual General Meeting on May 5, 2015.

4. Under the chair of Mr. Berthold Huber the representatives of shareholders and employees will in close cooperation determine the candidate for the new Chairman of the Supervisory Board. The election of the future Chairman of the Volkswagen Supervisory Board will follow a proposal made by members of the Supervisory Board representing shareholders.

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Dr. Ferdinand Piech was born in Austria to the daughter of Ferdinand Porsche and her husband Anton Piech. With a formal education as a mechanical engineer, he began his professional life working for Porsche from 1963 to 1971 where he helped develop the 906 and the legendary 917 race car which brought Porsche its first victory at the 24 Hours of Le Mans. In 1972 he moved to Audi in technical development and became head of Technical Development in 1974. During his stay at Audi he was involved in Audi’s iconic 5-cylinder engines, quattro development, turbocharging, the first Audi V8 and more.

In 1993 he became Chairman of the Board of Management at Volkswagen AG and was faced with a company nearing bankruptcy. Dr. Piech largely saved VW, Audi, Skoda and Seat using a common component architecture and (more importantly) ramming that ambitious plan through very quickly to give all these brands new products in a hurry. He has a reputation for firing people at a moments notice for lack of performance. He has little patience for ineptitude and failure and generally ruled with an iron fist during this period. However this is one of the big reasons that four car companies under the VW Group umbrella were able to get all new models across their entire lineups in a very short period of time. Things are far from perfect when you move quickly like that (quality for one), however it saved the VW Group brands at the time and started to turn the company around. Piech then orchestrated the buyout of Lamborghini, Bentley and the Bugatti name adding more luxury brands to the portfolio. He saw the ability to leverage Volkswagen Group common parts into those luxury brands where profit margins were already significantly better than in volume segments. In more recent years while he was on the Board at Volkswagen, we also watched the purchase of Porsche and Ducati brands in addition to controlling stakes in several truck companies.

Managing growing pains at the scale and level Volkswagen Groups have had to endure over the last 15 years is tough. One executive told me that this kind of massive growth can result in missteps, but there are few car companies growing and expanding at the rate VW Group is. In fact, many car companies have been retracting and filing for bankruptcy during the same 15 year period. Factor in VW Group being the most profitable car company in the world today and you could say they have already won the battle. Dr. Piech had an awful lot to do with that success.

VW has had their share of ups and downs over the years, but they have done a tremendous amount of things right in the last 10 years. Piech, like him or hate him, has been involved in a LOT of that. He certainly doesn’t get all the credit, but he had the vision and will to radically shake things up and fix a group of companies that were in shabby condition and far from profitable. As far as car executives go, Piech will take a large chapter in that history for himself.

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