It’s a dramatic story even by the tumultuous standards of this watershed year in the auto industry.
Porsche, an iconic brand and one of the last truly independent automakers, is about to be swallowed by Volkswagen.
The maker of the classic 911 sports car and other models beloved by Porsche loyalists will join VW’s stable of luxury brands Audi, Bentley and Lamborghini.
The move comes as Porsche introduces its first four-door sedan, the Panamera, which launches in Canada Oct. 17 with a price range of $115,000 to $155,000.
The merger, which will likely be completed in the next few months, is the culmination of a bizarre power struggle between two cousins who head boards of the respective automakers, and the collapse of plans by Porsche’s over-reaching chief executive officer.
Until a few months ago, it looked like Porsche, which will produce fewer than 100,000 vehicles this year, was close to swallowing VW, which made 3.1 million vehicles in the first six months of 2009 alone.
Porsche’s holding company had steadily bought up 51 per cent of VW and was preparing to bid for the rest when the recession derailed its credit arrangements and left it with a whopping debt.
Cash-rich VW’s chairman Ferdinand Piech seized the chance to bring Porsche into the fold of Volkswagen, which his grandfather Ferdinand Porsche helped create.
Porsche chairman Wolfgang Porsche, another Porsche grandson, initially fought the move but, with no white knight on the horizon, was forced to concede last week.
The Porsche and Piech clans together own the majority of stock in Porsche.
Porsche chief executive Wendelin Wiedeking, prime mover behind the bid for VW, has been forced out, along with another senior executive. Both got golden handshakes, Wiedeking’s worth $77 million.
Wiedeking joined an ailing Porsche in the early 1990s. His work diversifying Porsche and streamlining production to make it the most profitable automaker in the world helped preserve its independence. Taking control of VW was purportedly part of that strategy.
It’s important to know the back stories behind Porsche and VW to grasp the irony of the situation.
Porsche is best known for its post-war sports cars, but the company’s roots go back to 1931, when Ferdinand Porsche set up an automotive consulting firm in Stuttgart, Germany.
Porsche was a self-taught design genius whose fingerprints are all over the first half-century of European automotive history.
He designed his first car in 1900 and developed military vehicles for the Austrian armed forces in the First World War.
Later he worked for various German automakers, developing the Mercedes SS and SSK for Daimler – supercars of their day – and the powerful 650-horsepower, V-16 grand prix race cars for Auto Union in the 1930s.
Through it all, Porsche dreamed of producing a small, affordable car that could do for Europe what Henry Ford’s Model T did for North America.
Porsche got his chance – thanks to Adolf Hitler. The Nazi dictator commissioned him to design and build what became the Volkswagen Beetle.
Few were produced before the Second World War and Porsche turned back to military designs, producing among other things the Tiger tank.
After the war, French authorities arrested Porsche, his son Ferdinand Jr., known as ‘Ferry,’ and nephew Anton Piech, his sister Louise’s son, who had all worked with him.
Ferry Porsche was quickly released, but the elder Porsche and Piech were held until cleared of war crimes in 1947.
Meanwhile, Ferry Porsche had re-established Porsche and begun building small numbers of its first sports car, the 356.
The VW factory was flattened by Allied bombers during the war, but British occupation authorities rebuilt it and soon new Beetles were helping revive the West Germany economy.
Though separate companies, VW and Porsche have always been linked.
Ferdinand Piech was part of the design team for the 356′s successor, the 911, and was a key part of the racing effort that burnished Porsche’s reputation.
He left Porsche in 1972 to work at Audi, VW’s luxury arm, but not before helping develop the 914, a lower-priced mid-engine sports car jointly developed with VW and produced between 1969 and 1976.
Purists shunned the 914 as not a real Porsche because some versions were powered by VW-derived engines, but they’re more appreciated today. Its successor, the 924, used some Audi components.
Porsche’s Cayenne SUV, which also horrified Porsche diehards but fuelled the company’s profits over the last decade, shares its platform with VW’s Touareg and Audi’s Q7.
Reaction to the merger among Porsche fans has been surprisingly muted so far.
Forums have focused on Wiedeking’s parting gift, but there have been inevitable concerns about dilution of Porsche’s distinct character through more platform sharing and greater reliance on VW-Audi components.
But some see the glass as half full.
‘In the end, this may give them the economy of scale that is needed to allow them to become even more competitive,’ says one post.
Volkswagen, it goes on, produces the $1.5-million Bugatti Veyron, a 1000-horsepower, 16-cylinder monster capable of 400 kilometres an hour, at a loss.
‘If Piech is willing to put this type of capital into the Bugatti projects, imagine what Porsche can do (a profitable company) with that same type of support,’ the forum contributor said.
It’s too early to say what VW’s product plans are for Porsche, says Laurence Yap, Porsche Canada’s media relations spokesman. More may come out of VW’s board meeting next week.
‘VW has been very clear, however, that they want Porsche to retain its independence, from a brand, product and engineering point of view,’ he says. Yap says he personally believes integration may be in areas customers never see, such as the use of wiring harnesses and electronics.”
- Steve Mertl (CP) The Canadian Press