Board Animosity

Volkwagen's Family Crisis

VW's response to the emissions crisis has been mainly led by non-Porsche/Piëch board members.
  • Why it matters

    Why it matters

    The union and government representatives on VW’s board have largely been calling the shots since the diesel emissions scandal, suggesting a shift in the power base away from the ruling families.

  • Facts


    • The Porsche and Piëch families control 52 percent of the Volkswagen Group.
    • Volkswagen’s share price has fallen almost 60% since March 2015.
    • German law guarantees seats on the VW board to regional government and workers’ representatives.
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It was one of those moments when you really need strong leadership. For years, it turned out, Volkswagen staff had falsified emissions data. Now the game was well and truly up. The global corporation was embroiled in a scandal that just kept getting bigger. Customers were alarmed, employees were shocked. The authorities were wasting no time in investigating.

When the going got tough, some senior executives stood up to be counted. Berthold Huber was one. The former boss of the metalworkers’ union IG-Metall took over in April as “interim” board chairman after Ferdinand Piëch, the scion of the Porsche family that owns VW, had stepped down in a power struggle.

At Mr. Huber’s side was Bernd Osterloh, senior workers’ representative on the supervisory (non-executive) board, who at times had looked visibly enraged by the scandal. Stephan Weil also stepped up to the plate. Mr. Weil, who has a seat on the VW board as premier of the state of Lower Saxony, a shareholder, publicly worried about the company’s survival. But where was the Porsche/Piëch family?

The family owns more than 52 percent of the shares of Europe’s most important industrial group, via the holding company Porsche SE. But when the crisis came, there was a deafening silence from Salzburg, where most family members live.

This would not be the first time the family has gone awol. Back in April, when then chairman Mr. Piëch openly feuded with CEO Martin Winterkorn, the Porsche/Piëch clan kept well out of the public eye. As majority shareholders in the world’s largest car manufacturer, you might think the family would feel a duty to lead. The German constitution does after all say that “property entails responsibility.”

There is still a pressing need for clear leadership. It is not forthcoming from the family, so others are taking action.

But the only sense of responsibility seemed to belong to the trade unions and the government of Lower Saxony, VW’s second-largest shareholder – currently a coalition of the left-leaning Social Democrats and Green Party. This turn of events has revived long-standing charges that Volkswagen has a “co-management” structure – in other words, that the unions have an unusually strong say in company affairs. But what else could the unions do in the circumstances? Without leadership, any company would fall apart.

Reticence may be understandable for some of the Piëchs and Porsches, the ones who have long made it clear they don’t want a high profile outside the company. But this is not the case with Wolfgang Porsche. “Wopo,” as he is sometimes known, certainly has responsibilities: He is the spokesman for the Porsche branch of the family and a member of the executive committee of the supervisory board. This powerful committee is the highest executive body of the Volkswagen Group, making decisions that decide the company’s future.

When the emissions scandal broke, the executive committee bore the brunt of the pressure. Its members met weekly, and were in almost daily telephone contact. One insider told Handelsblatt that the discussions was driven by Mr. Huber, Mr. Weil and Mr. Osterloh. It was also these three who forced Mr. Winterkorn to resign as CEO, five days after the story first broke.

Before Mr. Winterkorn’s resignation, Mr. Osterloh wrote to all Volkswagen staff, saying: “I can assure you that our board meetings this week will do everything conceivable to clear this matter up. We are going to make sure there are consequences for the people responsible for this. And I am not talking about the rank and file here, I can assure you of that.” At this point, it was clear who was taking charge.

The new power structures were clear even to the public. On September 25, the executive committee appeared before the press to present the new CEO, Matthias Müller. Wolfgang Porsche, at one time a contender to replace Mr. Piëch, was perched at the far end of the podium. He read from his notes: “At this difficult time, the Porsche and Piëch families stand behind Volkswagen. No ifs, no buts.”

It seems Mr. Porsche showed little sign of this resolve in board meetings. Wopo, say some of those involved, is not taking enough action. And when he does do something, he goes for unimaginative, obvious solutions. One such solution is Hans Dieter Pötsch, the long-serving finance executive who was recently made chairman of the supervisory board. It was Mr. Porsche, say insiders, who pushed hardest for Mr. Pötsch to get the job.

Mr. Pötsch’s appointment was a defensive decision, in keeping with a cautious dynastic mentality. Mr. Porsche is a man who always seeks compromise, never conflict. The family had agreed on Mr. Pötsch. Ferdinand Piëch is said to approve. Sources close to the board say the family seemed more concerned with power and reputation than with the substance of the scandal itself.

The emissions scandal has hit sales at VW. Source: DPA


All this brings unnecessary risks for Volkswagen. The suspicion lingers that the company was at least two weeks late in informing its investors about the emissions scandal. As head of finance, Mr. Pötsch was responsible for communication with the financial markets. A number of large investors are already asking questions.

Mr. Porsche’s silence is telling. Even at the opening of the International Motor Show in Frankfurt in September – a venue traditionally seen as VW’s home turf – Mr. Porsche refused to comment on company matters. He would only speak about his hobbies – the vintage car collection, the cattle farm in Austria.

The keen organic farmer would say nothing about the world of Volkswagen. Even then, just before the scandal broke, there was plenty to talk about. It was only six months since a single sentence from Mr. Piëch had thrust the company into its first crisis of 2015. Back on April 10 – some months before the diesel disaster hit – Mr. Piëch had told the magazine Der Spiegel: “I’m keeping my distance from Winterkorn.”

Mr. Piëch’s words had a powerful impact, not least on Volkswagen’s stock price, which crashed down from its multi-year high of €253.20. After the emissions scandal, the price plunged further, at times to levels below €90.

Maybe we should give Mr. Porsche some credit for not trying to push his way to the top. That was always Mr. Piëch’s place. Mr. Piëch never thought much of the Porsches: They were too soft, he felt. He still holds that opinion, say sources close to the former chairman.

Mr. Porsche is very different to Mr. Piëch. His greatest concern is the transfer of power to the fourth generation of the family. Some three dozen children will inherit the Porsche billions. So far, none of them has pushed their way to the front; this could be because they are not allowed to.

It is possible the family will stay more in the background in future. But whether that is good for VW is another question. The family is contractually bound to make unanimous decisions: If someone were to break ranks, decisive measures could be blocked.

Things are different with the Quandt family of BMW, who have managed to avoid this kind of situation. Herbert Quandt, a major shareholder in BMW, made sure only the children of his third marriage would inherit shares in the Bavarian car maker. Susanne Klatten and Stefan Quandt were groomed to take seats on the board. And they are still there, ensuring the car maker stays on the right course.

The BMW way includes rules against empire-building on the part of senior management figures. Managers are forced to retire from the board at the age of 60. In May, the 50-year-old Harald Krüger became BMW’s new chief executive. At around the same time, Volkswagen was planning to extend Martin Winterkorn’s contract well beyond his 70th birthday.

At Volkswagen, there is still a pressing need for clear leadership. It is not forthcoming from the family, so others are taking action. “We want to reinvent Volkswagen, make it a better and stronger company,” said a letter sent to all employees last Thursday. The letter was signed by Mr. Müller, the new CEO, and Mr. Osterloh, the senior workers’ representative on the board.


The authors are Handelsblatt correspondents specializing in the automotive industry. To contact the authors:,,

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