It is the international automotive sector's worst-kept secret: Bernd Pischetsrieder will take over as chairman of the Volkswagen Group next year after Ferdinand Piech turns 65.
But things are never that simple when the enigmatic Piech is involved.
Piech has not said when he will retire, and Volkswagen has never confirmed that Pischetsrieder is his heir. It is just that everyone knows it. Here is a likely scenario: Next March at the Geneva auto show, Piech will unveil VW's audacious D1 luxury sedan, a model aimed at BMW and Mercedes. Soon after, Volkswagen will introduce the Colorado, its version of the sport-utility under joint development with Porsche.
These are important vehicles for Volkswagen and not just from an automotive viewpoint. The new models symbolize Piech's effort to take Volkswagen upscale. When Piech became chairman in 1993, Volkswagen produced 3 million cars a year. Now it produces 5 million units, and its four main brands - Audi, Seat, Skoda and Volkswagen - are thriving. The annual stockholder meeting is April 16. On April 17, Piech will be 65 years old. It would be an entirely appropriate time to make way for a new chairman.
Who will replace him? Volkswagen watchers inside and outside Wolfsburg, Germany, expect it to be Pischetsrieder, 53, chairman of Seat's board of management. But it still is not certain. At least two other Volkswagen executives and one notable outsider are considered possible candidates.
Jens Neumann, 56, the board's strategy and legal expert, 'has done a great job in North America and been a tremendous right-hand man for Piech,' he says. And Martin Winterkorn, 54, board member for research and development, rose rapidly through the organization in recent years. And, there is the outsider: Wendelin Wiedeking, 48, chairman of Porsche's board of management. Wiedeking's stewardship of Porsche is widely regarded as a classic example of a business turnaround. He has done exceptionally well for the company's family shareholders, of whom Piech is one.
But the contrasting sizes of the two companies would make a transition difficult. Volkswagen group sales are 100 times higher than those of Porsche, which produces 50,000 vehicles a year. And Wiedeking insists: 'I'm happy at Porsche, and there's still a lot to do.'
Piech keeps everyone guessing about precisely when he will retire and who will succeed him. 'The man loves surprises,' says a former board member at one of Volkswagen's rivals. 'I don't think it's as clear cut as everyone else thinks.' Piech insists, 'The supervisory board (of Volkswagen) is independent of the board of management. I am not the person who will decide my successor. Others will make that decision.'
Left unsaid is that members of the supervisory board will listen carefully to Piech's views. 'My task in preparing for my departure is to ensure there are good products and to make sure the return on capital is good,' Piech says. 'I would like my successor to develop it better than I have. That would allow me to sail around the world.'
Wolfsburg watchers are skeptical. Can a charismatic intellectual such as Piech simply walk away from a company that was his life for three decades? Will he be content to retire and quietly sip rum punches on the French Riviera? Or will he be tempted by a seat on Volkswagen's supervisory board that would allow him to watch over his creation?
This scenario would be all too familiar to Pischetsrieder if he does become Volkswagen's chairman. When he replaced Eberhard von Kuenheim as BMW AG chairman in 1993, his predecessor became chairman of the supervisory board. From that position, the grand old man of BMW kept a close watch on his protege. Between them, they managed to botch the takeover of Rover Group, which BMW had purchased only 11 months after Pischetsrieder became chairman. The episode is the biggest blot on the man's otherwise faultless career. In February 1999, it cost him his job at BMW.
So who is Bernd Pischetsrieder, and how qualified is he to run Volkswagen? BP, as he was known at BMW, studied mechanical engineering at Munich Technical University. Early expectations of an academic life changed when he joined BMW in 1973 as a production planning engineer. After several promotions, he was put in charge of BMW's assembly plant in South Africa. Later he returned to Munich, and by 1991 he was in charge of production.
Pischetsrieder's appointment as chairman two years later came as a surprise. Outsiders expected the autocratic von Kuenheim to nominate Wolfgang Reitzle, another alumnus of Munich Tech. But while Pischetsrieder crisscrossed the United States - under an assumed name - in search of a site for BMW's first North American auto plant, Reitzle considered an offer to become Porsche chairman.
Von Kuenheim regarded Reitzle's preparedness to join Porsche as a sign of disloyalty. Moreover, Pischetsrieder had won praise for his role in the launch of BMW's assembly plant in the United States, in Spartanburg County, South Carolina. Pischetsrieder was given the top job.
It certainly was not because of Pischetsrieder's appearance. Von Kuenheim, a formal Prussian, found it difficult to accept the new chairman's neatly trimmed beard. Indeed, beards still are extremely rare in the boardrooms of old-technology businesses.
Pischetsrieder and Reitzle continued to work alongside each other until that fateful day in February 1999 when disputes over Rover's fate cost both men their jobs. Ford quickly offered Reitzle a job running the company's newly created Premier Automotive Group. It would be 18 months before Pischetsrieder found gainful employment at Volkswagen.
After Pischetsrieder joined Seat, Volkswagen gave him additional duties as the company's quality control watchdog. Since then, he has kept a low public profile, aside from a few interviews with Spanish journalists about Seat's future.
Volkswagen declined to make Pischetsrieder available for an interview, but former colleagues consistently speak of the man's humanity. He is said to be friendly and considerate, a top man prepared to carry his own bags.
Unlike most German business executives, he often uses a person's given name rather than the more usual family name, and adopts the singular, more friendly du form of 'you.' He likes good cigars and enjoys an occasional glass of red wine or beer. He is said to be able to read Latin and ancient Greek. Mountain climbing and snowboarding are other pastimes, but, above all, Pischetsrieder likes cars and the faster the better. His love for fast cars has caused trouble. After the crash of a $1 million McLaren F1 in which he was traveling, Pischetsrieder donated $8,200 to charity in lieu of a fine.
But Pischetsrieder's nice manner may have contributed to his downfall at BMW. To appease sentiment in the United Kingdom, Pischetsrieder took a hands-off approach to Rover after BMW purchased it in 1993. He did not want BMW to be perceived as the all-conquering German company, so he gave Rover's management a lot of freedom. It was a bad mistake. Rover needed decisive leadership - and did not get it.
'The strategy decisions over Rover were right, but the execution was wrong,' says a BMW executive who asked to remain anonymous. 'Maybe he's not ruthless enough.'
But no one doubts Pischetsrieder's expertise in production engineering. Moreover, he has a remarkable understanding of the importance of brands - perhaps inevitable for anyone brought up in the BMW culture. Brand management plays a key role in a company that has four mass-market car brands, three specialist brands and ambitions to add a heavy-truck brand. Pischetsrieder's engineering and brand expertise will serve him well.
Pischetsrieder also enjoyed good relations with financial analysts, says John Lawson, managing director of equity research at Salomon Smith Barney in London. He also gets along with labor leaders - a major advantage at Volkswagen. 'He got on well with the works councils and labor forces,' Lawson says. 'That's very important, particularly in a company like Volkswagen.'
Indeed. The automaker is 20 percent owned by the state of Lower Saxony, which scrutinizes the company's work practices. Even in Germany, where labor has a major voice in corporate decisions, Volkswagen is treated as a special case.
With the exception of the Rover episode, then, Pischetsrieder's career path marks him as an entirely suitable candidate for the chairmanship of Volkswagen. The automotive world certainly expects it to happen, which is not to say it will. Ferdinand Piech takes delight in flouting conventional wisdom. He seems to live by the words of singer Frank Sinatra's theme song: 'I did it my way.'
E-mail writer Richard Feast at [email protected]