Ferdinand Piech, architect of VW's global expansion, dies aged 82

Frankfurt

FERDINAND Piech, Volkswagen AG's former chairman and chief executive, who transformed the German company from a struggling mid-sized carmaker into a global automotive powerhouse, has died, German tabloid Bild said on Monday.

Mr Piech, 82, died on Sunday in Rosenheim, Bavaria, the German tabloid said, without citing sources.

A representative for the Piech and Porsche families, who still control a majority stake in Volkswagen through their family holding company Porsche SE, had no immediate comment.

Volkswagen could not be reached for comment.

Mr Piech was a grandson of Ferdinand Porsche, the father of the iconic Volkswagen Beetle.

A brilliant engineer, Mr Piech turned around VW after betting on a modular construction technique which allowed Audi, Skoda and VW brands to share up to 65 per cent common parts, helping Volkswagen Group to attain greater economies of scale.

Under Mr Piech's leadership, VW emphasised engineering brilliance ahead of profits, and went on an expansion spree, adding high-margin luxury marques Bentley, Bugatti and Lamborghini in a single year.

"First and foremost I always saw myself as a product person, and relied on gut instinct for market demand. Business and politics never distracted me from the core of our mission: to develop and make attractive cars," Mr Piech wrote in his autobiography.

While working as a 31-year-old development chief at Porsche in 1968, he invested two thirds of Porsche's annual racing budget to build 25 Porsche 917 race cars with an untested radical 600 horsepower air-cooled 12-cylinder engine design.

Family members accused Mr Piech of being an irresponsible manager after risking the company's budget, but the Porsche 917 went on to become one of the most successful race cars in history, cementing his status as a visionary engineer.

During his nine-year tenure as CEO, Mr Piech turned a loss equivalent of one billion euros (S$1.54 billion) into a 2.6 billion euro profit while spearheading VW's expansion into a 12-brand empire which includes the Seat, Skoda, Bentley, Audi, Porsche and Ducati brands in addition to the MAN and Scania truck brands.

Mr Piech was known for his ability to outmanoeuvre competitors by stoking internal rivalries to his own advantage, even if it resulted in backing labour leaders to the detriment of his own managers including Bernd Pischetsrieder and Wolfgang Bern-hard.

Some of Mr Piech's top lieutenants were prosecuted for securing support for radical restructuring plans by sponsoring lavish business trips for labour leaders, including sex with prostitutes.

"It is not possible to take a company to the top by focusing on the highest level of harmony," Mr Piech said in his book.

Governance at Porsche and VW was for decades marked by encouraging a winner-takes-all culture which was later blamed for causing VW managers to lie about illegal emissions, rather than admitting that their cars could not meet clean air rules.

The scandal, which Mr Piech was not associated with, has cost Volkswagen more than 30 billion euros in lawsuits and fines.

Mr Piech became Volkswagen's chief executive in 1993 and chairman in 2002, reviving the VW brand by introducing sophisticated technologies into even small cheap cars, relying on the company's procurement prowess to raise profits.

VW was accused of stealing procurement know-how from General Motors under Mr Piech's watch but he was never charged with a crime.

He also cultivated unconditional loyalty from his top engineers, even while sometimes keeping them in the dark.

While working as development chief at Audi, Mr Piech decided to hide the aerodynamic qualities of the Audi 100 from his top staff by using wind tunnels in Hamburg, Stuttgart, Wolfsburg and Turin to develop the vehicle. He wanted to take the brand upmarket by touting its aerodynamic qualities, but was fearful that an engineer could defect to a rival with crucial know-how.

"I was in the middle of it all, putting together the pieces of the puzzle," Mr Piech said in his autobiography.

He introduced quattro four-wheel drive technology to Audi, and transformed it into a credible competitor to Mercedes-Benz and BMW.

Max Warburton, an analyst at Bernstein Research, described Mr Piech as the architect of VW's global success.

"His stewardship of VW has been indisputably successful. Piech will go down in history as an automotive legend, in the same class as Gottlieb Daimler, Henry Ford and Kiichiro Toyoda," Mr Warburton said in a 2012 note.

Mr Piech resigned as Volkswagen chairman in April 2015 after falling out with his chief executive Martin Winterkorn. The emissions cheating scandal would erupt only months later. REUTERS