Family drift is behind the Piech-Porsche rift

Wolfgang Porsche at a race in 2011. 

Wolfgang Porsche at a race in 2011. 

“I am at a distance to Winterkorn.” With that statement in an interview with German magazine Der Speigel the patriarch of VW, Ferdinand Piech, signalled that his relationship with the non-family CEO of the German auto group, Martin Winterkorn, is strained, to say the least.

Piech is used to being powerful enough to brush aside CEOs when they displease him, as he did with Winterkorn’s predecessor Bernd Pischetsrieder. So are the chief executive's days numbered?

Maybe not. Wolfgang Porsche, head of the Porsche family who control just over 50% of VW, told a news agency that "the statement from Dr Piech portrays his private opinion, which is not aligned… with that of the family.”

It seems that Winterkorn intends to fight his corner, and is supported by the powerful staff council and the state of Lower Saxony, a 20% shareholder in VW.

For those who like to speculate on what is happening in the Porsche-VW empire his divergence of opinions appears to signal a worsening of relations between the two branches of the empire. (Porsche and Piech are cousins, and grandsons of Porsche founder Ferdinand Porsche.)

The two side have had problems at least since the episode in 2008, when Porsche secretly built up a 75% stake in VW and tried to take it over. And that is by no means forgotten. Former Porsche exec Wendelin Wiedeking and its ex-chief financial officer Holger Haerter still face charges over the affair.

Crisis? Maybe. Or maybe a normal evolution. It is usual in family businesses for branches to diverge over time, as the families grow at different rates and their needs change. The 77-year-old Piech can’t go on forever. Neither can 72-year-old Wolfgang Porsche.

It is time for the next generation to take over, and decide whether the family can stay together, or whether it is time to go their separate ways. The real meaning of this latest spat is that family dynamics are still hugely important in this business and it is them, not market forces, which will define its future.