| BERLIN, April 16
BERLIN, April 16 For those who don't know him
well, Ferdinand Piech's recent retreat from the limelight might
be seen as a sign the Volkswagen chairman was
preparing to step back from leading the car-maker that aspires
to be the world's biggest.
Piech didn't show up at the Detroit motor show in January
and shunned the media last month at the VW group night in
Geneva, an annual fixture in his calendar where Europe's largest
carmaker traditionally boasts about its new products.
But even after 18 years at the helm of VW, nine of which as
chief executive officer, it's wrong to assume the mastermind of
VW's global expansion is tired of his work, in poor health, or
on his way out, officials at the company said, although they
chose not to explain his absences.
Instead, the canny strategist is expected to receive
shareholder backing for a third term as chairman at the annual
general meeting on Thursday, two days after he turns 75. If
Piech serves out the five-year period, the balding Austrian will
become the oldest-ever chairman of a listed German company.
"Piech is still the undisputed leader of VW," Helmut Becker,
a former chief economist at Bayerische Motoren Werke
who now runs a consulting business in Munich, told Reuters. "He
has his finger in every pie that VW management bakes."
It was Piech who spearheaded VW's expansion to an
eleven-brand entity that makes everything from fuel-efficient
city cars to 40-tonne trucks. When he was CEO, VW bought
ultra-luxury nameplates Bugatti, Bentley and Lamborghini and
integrated the mass-market Seat and Skoda brands.
And the buying spree isn't over yet. VW's luxury division
Audi is expected to announce the purchase of motorcycle company
Ducati ahead of the AGM. P i ech, himself a Ducati owner, has long
coveted the Italian company for its expertise in design and
Buying Ducati raises the VW brand portfolio to twelve, a
number that Piech - who has a dozen children from four
relationships - said in 2009 would be the perfect size for the
But for some analysts, the Ducati deal is a risky sideshow
that reinforces the view of Piech as a stubborn leader who is
sometimes driven by whims that defy industrial logic and which
even his fellow managers don't understand.
One of his most disputed decisions was the development of a
flagship sedan called the Phaeton at a cost of more than 1
billion euros ($1.3 billion) to take the VW brand upscale.
The Phaeton's lavish plant in Dresden, Germany, operated
below capacity for years and the model was withdrawn from the
United States in 2006 after the car failed to meet sales
"If I want to achieve something, I face up to the problem
and pull things through, without paying attention to what
happens around me," Piech wrote in his book "Auto.Biographie"
published in 2002.
FROM LOSS TO PROFIT
A grandson of Ferdinand Porsche, the founder of the
sports-car maker who developed the Beetle under a 1934 contract
with the Nazis, Piech took the reins at Audi in 1988 before he
joined the parent company.
He developed the brand's pioneering Quattro all-wheel drive
technology which helped Audi overcome its image as a maker of
bland vehicles like the Fox coupe and 100 sedan, paving the way
for the Ingolstadt-based manufacturer to rival BMW and
Mercedes-Benz for the world's luxury-market crown.
When he became CEO of VW in 1993, the company was losing
money, prompting Piech to cut pay and working hours at German
plants, and streamline production by sharing parts among models
and brands. The steps helped turn a loss of about 1 billion
euros into a 2.6 billion-euro profit in 2002 when Piech was
"Piech's strategic foresight, his persistence and technical
talent have proved absolutely invaluable for VW's success," said
Arndt Ellinghorst, an analyst at Credit Suisse in London. "He
knows better than anyone else how VW ticks."
One of Piech's biggest victories may have been turning the
tables on Porsche in the sports-car maker's botched
takeover of VW in 2009. Piech initially backed the plan, though
changed sides as Porsche's financing unraveled, opening the door
for VW to acquire 49.9 percent of the Stuttgart-based company.
Porsche's holding company, controlled by the Porsche and
Piech families, holds a majority of VW common stock. VW, in
turn, is now aiming to buy the remaining 50.1 percent of
Porsche's automaking business after abandoning a planned merger.
The takeover battle exposed Piech as a ruthless figure.
He publicly damaged the reputation of Porsche CEO Wendelin
Wiedeking, whom he had hired in 1993 against the will of the
families, and chief financial officer Holger Haerter.
The two executives, who opposed selling Porsche's automotive
unit to VW, quit after being accused of racking up debt at the
sports-car maker by using share options to pile up VW stock.
Another executive ousted by Piech was his handpicked
successor as VW CEO, Bernd Pischetsrieder, who pulled the
Phaeton from the United States and disagreed with Piech over the
use of a holding in truck maker Scania.
"It's not possible to take a company to the top by focusing
on the highest level of harmony," Piech wrote in his
autobiography. "My desire for harmony is limited."
Piech, who as a student preferred to sit in the back of the
classroom and avoid attracting attention, said in his book that
in the three decades he spent at VW the company doctor was the
only person he allowed to call him by his first name.
Pischetsrieder's departure in December 2006 opened the way
at VW for Martin Winterkorn, who worked closely with Piech at
Audi in the 1980s.
Under Winterkorn's leadership, VW pushed ahead with global
expansion, took controlling stakes in Scania and fellow truck
maker MAN and is now combining with Porsche. Group
profit surged by more than half last year to 11.3 billion euros
as vehicle sales rose 14.3 percent to a record 8.16 million
VW surpassed Toyota Motor Corp as the world's
second biggest car maker and wants to clinch the top spot,
currently held by General Motors, no later than 2018.
"Piech and Winterkorn complement each other perfectly and
are an ideal leadership pair for VW, particularly in
increasingly difficult times," Joerg Bode, VW board member and
economy minister of Lower Saxony, the company's second biggest
shareholder, told Reuters.
Ellinghorst of Credit Suisse said focusing power around
Piech and Winterkorn has for years been a formula for success at
VW, though the car maker's next generation of leaders should
push for more openness in management once the two patriarchs
resign. Filling their shoes won't be easy, he said.
VW increased its workforce by a quarter to more than 500,000
people last year and its rapidly growing size requires changes
in decision-making structures, said Ellinghorst. It's important
to develop potential heirs to avoid a vacuum.
Possible candidates to replace Winterkorn, who could take
over from Piech as chairman after his contract ends in December
2016, include Karl-Thomas Neumann, head of VW's China operations
and a former CEO of parts-supplier Continental, and
Winfried Vahland, the chief of Skoda, according to Ellinghorst.
Despite his more immediate ambitions, there are however
signs that Piech is preparing for a time when he will no longer
be so active.
He placed his holdings in two trusts in 2010 to prevent his
heirs from disbanding the auto empire. VW shareholders will also
be asked this week to elect Piech's younger wife Ursula, already
deputy head of the trusts, to the supervisory board.
The former BMW chief economist Becker believes Piech could
wait until 2017, when he is 80, before ceding the chairmanship.
"VW should then be the world's biggest car maker," Becker
said. "Piech's vision of an all-embracing automotive group has
de facto come true. I couldn't think of a better moment for him