Ferdinand Piech, architect of Volkswagen’s global expansion, dies aged 82

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Ferdinand Piech, Volkswagen AG’s former chairman and chief executive, who transformed the German company from a struggling midsized carmaker into a global automotive powerhouse, has died, German tabloid Bild said on Monday.

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.

Piech was a grandson of Ferdinand Porsche, the father of the iconic Volkswagen Beetle and part of the Porsche and Piech clans which today still control VW Group.

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

Under 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 brands 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,” Piech wrote in his autobiography.

During his nine-year tenure Piech turned a loss equivalent of 1 billion euros 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, Bentley and Ducati brands in addition to the MAN and Scania truck brands.

Piech was known for his ability to outmanoeuvre competitors by stoking internal rivalries to his own advantage, even if it resulted in turning against his own managers, including VW Chief Executive Bernd Pischetsrieder, to side with VW’s labour leaders.

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 Piech him 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.

“It is not possible to take a company to the top by focusing on the highest level of harmony,” Piech, who has 12 children from four different women, explained in his autobiography.

Governance at Porsche and VW was for decades marked by encouraging in-house rivalries.

While working as development chief at Audi, Piech decided to keep his top engineers in the dark about the aerodynamic qualities of the Audi 100 by using wind tunnels in Hamburg, Stuttgart, Wolfsburg and Turin to develop the vehicle.

That way no single 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,” Piech said in his autobiography.

Piech held various senior positions within the VW empire, including development jobs at Audi where he developed the brand’s quattro four-wheel drive technology, and transformed the unit into a credible competitor to Mercedes-Benz and Audi.

He became Volkswagen’s chief executive in 1993 and chairman in 2002 after a brief stint at Mercedes-Benz where he developed diesel engines.

By the late 1990’s VW was selling more than 5 million cars a year with industry analysts crediting Piech for improving VW’s image as a quality manufacturer.

Max Warburton, an analyst at Bernstein Research, described Piech as the architect of VW’s global success in a note from 2012.

“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.”

Piech, resigned as Volkswagen chairman in April 2015 after falling out with his chief executive Martin Winterkorn. Volkswagen would become embroiled in an emissions cheating scandal only months later.

The fourth generation of the Porsche and Piech families now sit on the board of directors of Porsche Automobil Holding SE <PSHG_p.DE> which controls a 52.2 percent stake in Volkswagen, the world’s largest carmaker.