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story.lead_photo.caption The Porsche-Piech family, which holds a controlling stake in Wolfsburg, Germany-based Volkswagen, is contractually obliged to speak as one through its holding company but has struggled to make decisions since the death of Ferdinand Piech.

The sudden death of Ferdinand Piech, who built Volkswagen into a global powerhouse, puts the spotlight on one of Europe's wealthiest families and the challenges it faces to navigate the tectonic shifts roiling the auto industry.

Volkswagen was always hard to handle: Its home state of Lower Saxony in Germany owns 20% of the Wolfsburg-based manufacturer and worker representatives can veto factory closures. But the situation got even more complex a decade ago, when the reclusive Porsche-Piech clan -- descendants of the VW Beetle's creator, Ferdinand Porsche -- gained control of a majority of the company's voting shares.

New to the responsibility involved in guiding a company with more than 600,000 employees, the family of about 80 people -- contractually obliged to speak with one voice through its holding company, Porsche Automobil Holding -- has struggled to reach decisions, often leaving Volkswagen in the lurch.

As the diesel-cheating scandal roiled the company in 2015, Wolfgang Porsche, the clan's leading figure, did what he does every autumn and went deer hunting near his Austrian farmhouse, making almost no public comment for months on the worst crisis in the company's history.

While Piech broke with his relatives after an acrimonious power struggle months before the diesel scandal surfaced, he was the dominant figure and the only one who devoted his life to the source of the family's wealth. His death draws attention to the clan, which is led by Wolfgang Porsche and Piech's brother Hans Michel, who are both in their late 70s.

Piech's death "does bring the very pressing question to the table: How do the families deal with succession planning? Is the current structure best suited to govern the largest company in Europe?" said Arndt Ellinghorst, a London analyst with Evercore ISI. The family setup "looks like an overly complex structure in a world that needs super-fast decision making."

Volkswagen has sought to move past the diesel crisis, with the auto industry's most aggressive push into electric vehicles, committing to spending $33 billion in an ambitious bid to turn the niche cars into a mass-market product. At the same time, the company is carrying around excess baggage from Piech's empire building, including units that make engines for ships and design power plants alongside a sprawling in-house component business.

The spinoff of a minority stake in heavy trucks unit Traton was Volkswagen's first tangible effort at streamlining its portfolio, which includes brands that range from exotic Bugatti and Lamborghini to upscale Porsche and Audi, to volume-focused Skoda and Seat.

The present and future of the Porsche-Piech clan lie in the hands mainly of two grandsons of Ferdinand Porsche, who have been reluctant to pass on responsibility to an increasingly disparate group of younger family members.

SundayMonday Business on 09/01/2019

Print Headline: VW patriarch's death leaves leadership void in auto family


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