The Battle Between German Auto Makers

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CASE STUDY 11.2: CAR WARS AT WOLFSBURG
Over the past 15 years, Volkswagen Group (VW) ac-quired several fiefdoms Audi, Lamborghini, Bentley, Bugatti, Skoda, SEAT that jealously guarded their brand and continuously rebelled against sharing knowledge. One member of VW's supervisory board (the German equivalent of a board of directors) commented that managing the company is "like trying to ride a chariot with four or five horses, each of which pulls in a different direction." Then Porsche AG entered the fray. The luxury sports car company, which relies on VW for some of its production work, began acquiring stock in VW and eventually achieved a controlling interest. Porsche CEO Wendelin Wiedeking was aware of VW's internal rivalries. "If you mix the Porsche guys with the Audi guys and the VW guys you will have trouble," says Wiedeking. "Each is proud to belong to his own company." Yet Wiedeking stirred up a different type of conflict as Porsche tightened its grip over VW's supervisory board. Through an unswerving drive for efficient production and astute marketing, Wiedeking and his executive team trans-formed Porsche into the world's most profitable and presti-gious car company. Wiedeking wanted to apply those practices at VW by closing down inefficient operations and money-losing car lines. "Wiedeking is a Porsche CEO from another corporate culture," says German auto analyst Christoph Stuermer. "He's out to maximize profits by cutting costs. And he snubbed everyone, telling off VW management, inter-fering with their way of doing business." Ferdinand Dudenhoeffer, director of Germany's Center of Auto-motive Research (CAR), agrees. "Porsche is very success-ful in being lean and profitable. It's not going to be harmonious." Particularly offended by Wiedeking's plans was VW chairman Ferdinand Piëch, who had a different vision of Europe's largest automaker. Piëch, whose grandfather developed the VW Beetle, placed more emphasis on spectacular engineering than exceptional profits. For example, he supported the money-losing Bugatti brand, which VW acquired several years ago when Piëch was CEO. More recently, Piëch championed the Phaeton, VW's luxury car that broke new ground in innovation ...