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Volkswagen's Ferdinand Piech's Porsche Connections: The Clash of Interests?


Code : GOV0023

Year :

Industry : Automobile

Region : Germany

Teaching Note: Not Available

Structured Assignment : Not Available

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Introduction: On September 25th 2005 in Stuttgart,Germany-based luxury sports carmaker Porsche announced its plans to acquire 20%stake inmass-market carmaker Volkswagen. Both these companies had enjoyed close alliances in the past and had collaborations on various projects. Porsche’s luxury SUV Boxster wasmanufactured in partnership with Volkswagen. Its Cayenne SUV also shared the platform with Volkswagen’s SUV. Moreover, Volkswagen supplies about 30% of the automobile parts Porsche uses.Analysts opined that a closer association would help Porsche develop its first four-door sports coupe, the Panamera. In October, Porsche paid three billion euros ($3.6 billion) for 8.27%stake in Volkswagen bringing its total stake to 18.53% in the company. But Porsche’s investors were apprehensive about the deal that ties Porsche to the declining fortunes of Volkswagen. Stephen Pope, an analyst at Cantor Fitzgerald in London said, “For Porsche the company, the purchasewas smart. For Porsche’s shareholders, it’s debatable.”4 Great concern was raised on the role of Volkswagen’s non-executive chairman, Ferdinand Piëch, who also happens to be the grandson of Ferdinand Porsche (founder of Porsche) and amajor shareholder of Porsche.

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Ferdinand Piëch (hismother Loise Piëch was a daughter of Ferdinand Porsche) graduated fromthe Zurich Technical Universitywith a degree inMechanical Engineering in 1962 and was involved in the development of sports cars at Porsche. In 1972, he joinedAudi – a subsidiary of Volkswagen.And in 1975 he became themanager of technological engineering division, responsible for the concepts ofAudi 80 andAudi 100.Hewas also responsible for the development of a car for the WorldRally Championship that resulted in the all wheel driveAudi Quattro. In 1993, he became the chairman and CEOof Volkswagen...

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