Ferdinand Piech, Creator of Volkswagen Automotive Empire, Dies

(Bloomberg) -- Ferdinand Piech, the Porsche family scion who built Volkswagen AG into a global powerhouse, only to exit abruptly shortly before the German carmaker skidded into the diesel-cheating scandal four years ago, has died. He was 82.

Piech passed away “suddenly and unexpectedly” on Sunday, his wife Ursula said in a statement. German newspaper Bild reported that Piech collapsed after dinner with his wife at a restaurant in Rosenheim, southern Germany, and was rushed to a nearby hospital, where he died.

“Volkswagen wouldn’t stand where we stand now without Ferdinand Piech,” said Bernd Osterloh, Volkswagen’s powerful labor leader and a member of the supervisory board. “We owe him our gratitude and recognition.”

The grandson of Ferdinand Porsche, who laid the basis for the iconic 911 sports car, Piech worked his way up to the Volkswagen top job in the 1990s after cutting his engineering teeth at Porsche and Audi. Admired for his deep technical knowledge and obsession over manufacturing details, but feared for his Machiavellian management style, Piech took over at VW in 1993 when the company was weighed down by huge losses, poor quality and high costs.

About a decade later, Piech moved to the position of supervisory board chairman, having turned around the company -- all without large-scale job cuts, a feat that won him the allegiance of powerful labor unions and shareholders alike. Piech continued to guide strategy after becoming supervisory board chairman in 2002. His thirst for acquisitions and empire-building helped VW grow into a global automotive powerhouse that overtook Toyota Motor Corp. about three years ago to become the world’s biggest carmaker.

His biggest triumph was the acquisition of the Porsche brand in 2012. The takeover came with a personal twist because Piech was able to turn the tables on his cousin, Wolfgang Porsche, who had pushed the sports-car producer to bid for VW four years earlier. Piech sided with the state of Lower Saxony, which owns a blocking stake in VW, to rebuff Porsche’s offer just as the suitor’s debt was surging from the takeover effort.

“His most significant achievement is that he built the largest and most successful automobile company in the world,” said John Wolkonowicz, an automotive historian who worked inside VW in Germany as a consultant in the 1990s. “And he built it from nothing.”

VW Beetle

The combination of VW and Porsche united manufacturers that trace their roots to Piech’s grandfather, who developed the original VW Beetle car under a contract with Germany’s Nazi regime in 1934. But even before the Porsche integration, Piech had spent years building an all-encompassing automotive emporium, stretching from the diminutive Golf to the super-charged Bugatti. By the end of 2012, Volkswagen either owned outright or held controlling stakes in 12 vehicle brands, including supercar producer Lamborghini, heavy-truck makers MAN and Scania and motorcycle maker Ducati.

Volkswagen credited Piech with shaping “the development of the automobile like no other, pushing forward the entire industry and above all Volkswagen, transforming the company into a global mobility group,” according to a statement by Supervisory Board Chairman Hans-Dieter Poetsch.

His obsession with cars -- and the desire to make the best possible ones, regardless of price -- also cost VW a lot of money. With the flopped Phaeton sedan, the Bugatti Veyron supercar and Audi’s A2 hatchback, the Volkswagen group accounts for three out of the 10 biggest money-losers in modern automotive history, according to estimates from Max Warburton, an analyst for Sanford C. Bernstein & Co.

Regardless, Piech enjoyed a cult-like following within the company. He typically got his way when he lost confidence in managers, forcing out a series of executives, including his hand-picked successor as CEO, Bernd Pischetsrieder, in 2006. Three years later he famously insinuated during a dinner in Sardinia that then-Porsche CEO Wendeling Wiedeking, who launched the takeover attack on VW, had lost his support. The comment marked the turning point in Porsche’s bold attempt to take over its much-larger peer and Wiedeking was eventually forced out.

But in 2015, he lost his grip after fierce internal wranglings and an apparent attempt to install his wife as supervisory board chairwoman to succeed him. The group’s leadership committee also defied Piech in April 2015 by saying it would vote to extend Martin Winterkorn’s contract as CEO, against Piech’s wishes. A month later, Piech resigned.

“If I want to achieve something, I approach the problem and push it through without realizing what’s happening around me,” he wrote in his 2002 autobiography. “My desire for harmony is limited.”

Diesel Scandal

Piech’s legacy was tainted by the spectacular fallout with fellow family members and other VW key stakeholders over who was to blame for the manufacturer’s diesel emissions scandal, which has cost the company 30 billion euros ($33 billion) so far and triggered the deepest crisis in its history.

Piech claimed he had mentioned indications of possible wrongdoing to other top officials in 2015 before U.S. authorities uncovered the large-scale emission manipulation months later, but that those warnings weren’t heeded. His allegations were denied by his cousin Wolfgang.

“Dieselgate put the final stain on his career,” Wolkonowicz said. “Most people believe that because he was such a hands-on manager, he probably knew about it.”

Ferdinand Karl Piech was born on April 17, 1937, in Vienna. His father, Anton, was a lawyer, and his mother, Louise, was the daughter of Ferdinand Porsche. The third of four children, Ferdinand Piech had two brothers and a sister.

Swiss Education

After attending the Swiss boarding school Lyceum Alpinum Zuoz, near St. Moritz, from 1952 until 1958, he studied engineering at the Swiss Federal Institute of Technology in Zurich. In 1963, Piech went to work for his uncle Ferry at Porsche in Stuttgart, where he later became a technical manager.

Piech joined VW in 1972, when he moved to the Audi subsidiary from Porsche after the family decided to end its active role in the sports-car maker’s operations. At Audi, he pushed the development of the Quattro all-wheel-drive system, helping establish the brand as an innovator and later enabling it to overtake Daimler AG’s Mercedes-Benz in global luxury-car sales.

At VW -- and above all Porsche -- family and business were always intertwined. Piech arranged for his wife Ursula, a former kindergarten teacher and governess for his family during the 1980s, to join VW’s supervisory board in 2012. She resigned alongside her husband in April 2015.

Although descendants of the same family, Piech and Wolfgang Porsche were very different -- one the wiry and driven engineer who dedicated his life to automobiles, the other soft-spoken and seemingly averse to conflict. The relationship between the two was badly strained after Piech alleged that Porsche and other VW supervisory board leaders may have known about Volkswagen’s emissions cheating earlier than previously acknowledged. In March 2017, Piech sold out by divesting his major holding in family investment vehicle Porsche Automobil Holding SE to other members of the clan.

Piech had five children with his first wife, the former Corina von Planta; two from his relationship with Marlene Porsche, the former wife of his cousin Gerhard Porsche; three with Ursula; and two other children.

--With assistance from Keith Naughton.

To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net;Chris Reiter in Berlin at creiter2@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Craig Trudell at ctrudell1@bloomberg.net, Benedikt Kammel

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