The Volkswagen Power Struggle has Fallen Back Toward the Porsches and Piechs

The ousting of ex-CEO Herbert Diess, the Porsche IPO — it's all part of a grand plan to steer back control.

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Image: Porsche

The family owners of Volkswagen are creating the corporate structure they want, Toyota is idling a production line cause everyone who works on it has COVID, and Alfa Romeo’s design boss has some choice — and arguably right — words for BMW and the rest of the industry. All that and more in The Morning Shift for Tuesday, August 9, 2022.

1st Gear: Tighter Reins

Last month, Volkswagen’s former CEO Herbert Diess announced he was stepping down. His replacement is Porsche CEO Oliver Blume, and what’s interesting about that is that Blume will continue to run Porsche as he runs Volkswagen. It’s all part of a plan by the Porsche-Piech family that owns Volkswagen Auto Group to exercise finer control on the world’s second-largest automaker. From Reuters:

The Porsche and Piech families, who control holding firm Porsche SE - which owns most of Volkswagen’s voting rights - are hoping to return the group to calmer waters after a turbulent period under outgoing CEO Herbert Diess, they added.

“They want to keep a closer eye on the implementation of the strategic guidelines,” a person with knowledge of the families’ thinking told Reuters.

Under Diess, Volkswagen made major steps towards electrification, but his forthright style provoked opposition within the company that sometimes eclipsed his achievements, testing the families’ patience, the sources said.

As a result, they plan to run a tighter ship.

“The families are actively involved - an ability they have long been believed incapable of,” a second source said.


Many investors have taken issue with Blume’s dual role, especially as it contradicts Porsche’s (the brand, to be clear) independence, even if Volkswagen eventually manages to spin the company off. Ultimately, that’s by design: the owning families want Porsche listed publicly not for any material significance to the brand, but because it will allow them to control it directly:

Touted as the “preferred candidate” of the Porsche and Piech clan, Blume is expected to push through the long-awaited initial public offering (IPO) of Porsche AG, the families’ namesake carmaker he has been leading since 2015, the people said.

The IPO is critical to the families as they would become a direct shareholder of Porsche AG again after the maker of the iconic 911 model was taken over by Volkswagen in 2009, following a botched attempt by Porsche AG to buy Volkswagen instead.

“The structure of the IPO primarily fulfils the families’ interest in further tightening their grip on Porsche, and they will not be dissuaded from this plan,” said Hendrik Schmidt, corporate governance expert at DWS, which holds shares in both Volkswagen and Porsche SE.

The agreed structure of the IPO, which has still to be confirmed, would give the Porsche and Piech families a blocking minority in the sports car brand that was founded by their ancestor Ferdinand Porsche in 1931.


Students of history will note that this power struggle dates back decades, and played out on a grand scale when Porsche looked set to take over Volkswagen in the late aughts, only for the economic rug to be pulled out from underneath the former and the reverse happening.

Put simply? Take it away Manuel Theisen, retired professor for business administration at Ludwig-Maximilians-University Munich and a specialist in corporate governance:

“The primary reason is power.”

2nd Gear: We Love a Summit

Today, President Biden signs the $52 billion CHIPS and Science Act to spur semiconductor production in the United States. Yesterday, executives from GlobalFoundries, Applied Materials, Ford and General Motors met with government officials behind closed doors to talk about it, or maybe just pop off champagne. From Reuters:

GlobalFoundries CEO Thomas Caulfield said in a statement the chips legislation “protects U.S. economic, supply chain and national security by accelerating semiconductor manufacturing on American soil.”


The companies said the summit would bring them together with government officials to “discuss how these public investments can accelerate semiconductor and emerging technology manufacturing, support the electrification of automobiles with a ready supply of chips, including feature-rich chips, and strengthen the United States’ economy, supply chains, and national security.”

White House National Economic Council Director Brian Deese, Under Secretary of Defense for Acquisition William LaPlante and National Security Council official Tarun Chhabra were among officials due to attend.

Ford CEO Jim Farley said in a statement “a reliable domestic supply of chips, including legacy semiconductors needed in the automotive and defense industries, will keep American manufacturing lines humming.”


They’ve already done all the talking; my bet is on the champagne.

3rd Gear: More Toyota Stoppage

The Morning Shift, as ever, is your source for all the latest Toyota production pause news, whether due to supply chain snags or COVID-19 outbreaks. Today it happens to be the latter: the manufacturer has suspended the night shift on one production line at its Tsutsumi plant after 16 employees came down with the virus. Again, Reuters:

The suspension comes as the Japanese automaker seeks to boost its production in earnest after COVID-19 lockdowns in China and a global chip shortage forced it to repeatedly scale back output in the April-June quarter, falling about 10% short of its initially planned target.

A total of 16 workers at the Tsutsumi plant in Aichi Prefecture were infected with COVID, making it hard for the company to secure enough workers for operations, the company said in a statement on Tuesday.

Output of about 660 vehicles would be affected by the suspension, a spokesperson told Reuters.

Toyota had suspended night shift operations at a different factory for two days for the same reason in late July.

The world’s largest automaker by sales has stuck to its 9.7 million global production target for the year ending March 2023, saying output and sales were on path to recovery from this month onwards.


I’d love to know what car that idled production line belongs to. I hope it’s not the Vellfire, because that’s a sick name belonging to a sick van.

4th Gear: More Volkswagen, Audi Recalls

The National Highway Traffic Safety Administration has published a recall notice for Audi A3, S3 and TT models, as well as the Volkswagen Golf, GTI, Golf R and Golf Sportwagen, for airbags that could explode. It only covers 1,216 cars in the U.S., thankfully, and is unrelated to the Takata defects. From CNET:

Why the large spread? “The recalled vehicles were assembled with passenger airbag inflators manufactured in the same production batch as the affected vehicle,” NHTSA said. “The airbag inflator of one Audi A3 involved in an accident [burst] when deployed.”

Audi and Volkswagen dealers will replace the entire front-passenger airbag module in these vehicles, and of course, the work will be performed free of charge. Owners will be notified by mail beginning in late September.


This isn’t the only airbag snafu VW has had lately; about 225,000 Atlas SUVs were recalled back in March for an electrical issue that could delay airbag deployment and cause unintentional low-speed braking.

5th Gear: Alfa’s Design Chief Fires Shots at BMW

See, he told Top Gear that in a world where everyone’s special — i.e., electric — no one is, so designing cars that “look electric” is both an effort that yields diminishing returns and is stupid.


Of course, I’m paraphrasing; he didn’t call it “stupid.” I did. Here’s what he actually said:

“Electrification changes the way the car moves, but the character, the style, the values will remain. Looking electric for the sake of it doesn’t make sense from my point of view,” he responded when asked what impact electrification will have on future design.

“We’re not going to say, ‘OK, it’s an electric car, let’s make it look different because it’s electric’. This is the way it worked for companies like BMW, it was more marketing communication, they wanted to signify in the design of the car that it was electric, to show it was different to everything else out there, to be seen as a tech company.

“But now, everyone is, or will be, electric, so there is no need to say, ‘hey, hello, I’m electric, look at me’. There is no need to signify that you are electric. The only thing that changes is the source of power, but the rest of the values of the car don’t change. To me it’s important that it’s an Alfa Romeo, whether it’s electric or not.”


I agree! Electric cars should only look different than their ICE counterparts in the sense that their unique architecture allows things like, for example, frunks and greater interior volume owing to the lack of an engine. That’s form and function in tandem, as it should be. Whatever BMW’s doing, alternatively, is just intended to annoy people so they talk about the brand. What do you think?

Reverse: Today We Honor a King


Neutral: All the Good Vans

True care, truth brings. Seriously though, vans are actually badass in Japan, whether we’re talking about kei vans or the big stuff, like the Vellfire. I actually drove behind a Mitsubishi Delica on the road yesterday! Good. We need more of that energy here.