Ferdinand Piëch leaves a giant legacy after nine years as chairman of Volkswagen group. But it's hard to say exactly what that legacy is.
He had great success in the 1960s as head of the racing department at his family's Porsche AG. And most credit him with building up Audi as head of r&d and later CEO during the late 1970s and 1980s. But how much did he do for Volkswagen group? And at what price?
He actually did plenty. After replacing Carl Hahn as chairman of VW in 1993, Piëch turned an inflexible company that lost $1.1 billion that year into a nimble, profitable mass producer.
He turned a virtually bankrupt Seat around and integrated the Spanish subsidiary into the group's platform and production system. He managed the takeover and integration of Skoda. He acquired Bentley, Bugatti and Lamborghini and bought a controlling stake in Scania trucks.
He wanted to create a Volkswagen group that appealed to all tastes in every segment. He introduced a cost-saving platform strategy in which the technical base of one model is used for cars with different brands, different concepts and in different price ranges.
'Only the hat is different,' Piëch used to say. 'What's underneath the hat doesn't matter to the customer.'
But Piëch underestimated how much it did matter. Many car buyers quickly realized that Skoda vehicles were technically identical to Volkswagen models, yet more affordable.
In addition, the designs of the various brands' models weren't that different. Towards the end of his tenure, Piëch hated the term platform strategy, which he himself had introduced. He preferred to call it a 'component' or 'module' strategy.
Piëch also paid little attention to market research that forecast cannibalization among the VW group brands - especially in mainstream segments.
Despite the flexible platforms, he missed out on the industry's move toward fragmentation and niches. None of the VW brands offers compact minivans. There are no easily affordable fun cars such as small cabrios or roadsters, and there are no SUVs. Instead hatchbacks, station wagons and sedans with almost identical technical content compete under different brands for the same customers.
Piech never worried much about investor relations. That's because the so-called Volkswagen Law has limited any investor from holding more than 20 percent of VW's voting rights, the same share held by the carmaker's largest shareholder, the state of Lower Saxony. Piëch maintained close relations with former Lower Saxony Governor Gerhard Schroeder, now the German chancellor, and his successor, Siegmar Gabriel. The state's long-term strategy has been to emphasize full employment rather than shareholder value. The strategy suited Piëch just fine.
But Piëch did make revolutionary changes on the factory floor at VW. Instead of lay-offs, his personnel chief Peter Hartz introduced flexible work schemes, reduced the weekly working hours and thereby cut wages.
Piëch began breaking the massive, inflexible Wolfsburg factory complex into small units he called 'a plant in the plant.'
By doing so, Piëch restored pride and self-confidence in Volkswagen's plants, and earned much respect from employees.
His chief focus was on cutting costs in the production and development processes. In 1993, Piëch hired General Motors' wildly intense purchasing boss J. Ignacio Lopez from General Motors to shake up VW's suppliers. Lopez cut costs all right, but he almost destroyed Piëch in the process.
GM sued Piëch, Lopez and several of his purchasing 'warriors,' accusing them of stealing secret GM documents and using them in negotiations to put price pressure on VW's suppliers. In December 1996, Lopez was indicted by German authorities. The charges were dropped in 1998 after prosecutors decided it was no longer in the public interest to pursue the criminal charges. But a court ordered Lopez to pay DM400,000 (E204,517) to charity.
GM dropped its civil charges against Volkswagen in January 1997 after VW agreed to pay GM $100 million in damages. VW also agreed to buy $1 billion in GM-made car parts over seven years.
Lopez and some of his warriors had to leave Volkswagen.
Forcing down component prices took its toll on VW product quality. Many suppliers relaxed controls to meet Lopez's price-cut demands. Piëch's successor, former BMW Chairman Bernd Pischetsrieder, was hired as quality czar in 1999 to fix the problems.
Relations between Volkswagen and its vendors also had to be repaired. Piëch needed a network of top-class suppliers to expand the product and brand range into the high-end luxury and sports segments.
Meanwhile, Piëch the engineer wanted to prove that highly economical and ecological cars were technically feasible. The Lupo 3L, which consumes just 3 liters of fuel per 100 kilometers, is on the market, though it is a poor seller. Piëch made his last business trip as VW chairman in a prototype with a fuel consumption of 1 liter per 100 kilometers.
Piëch felt that pursuing highly economical and ecological versions of series cars would justify his commitment to develop luxury and sporty models with enormously powerful and thirsty engines - such as the 1001hp Bugatti to be launched in 2003.
His new job as chairman of the supervisory board will allow Piëch to do what he has always wanted: spend more time with his family - he has 13 children - and sail around the globe in the yacht he helped to design.
He will also - finally and after many changes - publish his Auto-Biography. In the book, co-author and fellow Austrian Herbert Völker will provide Piëch's own view of his legacy.