Fortune‘s senior editor, Alex Taylor III, calls Porsche the mouse that roared, because of what the tiny company’s CEO, Wendelin Wiedeking, has pulled off:
Appointed CEO in 1993 as a 41-year-old wunderkind at a time Porsche was weak — Toyota was sniffing around, and output had cratered to 15,000 cars a year — Wiedeking used his production expertise to turn it around. Now Porsche earns more money per car than any other carmaker (as much as $9,000). No wonder Wiedeking, 54, has been mentioned as a candidate for nearly every top automotive job in Germany.But all the talk halted in September 2005, when he used $3.6 billion of Porsche’s excess cash to buy 18.6% of Volkswagen. Porsche has since increased its stake to 30.9% (worth $19 billion) and is now VW’s leading shareholder.
The difference in scale, style, and profitability between the two companies is breathtaking. VW is the fourth-largest auto manufacturer (after Toyota, GM, and Ford). Last year it employed 325,000 workers to make 5.7 million vehicles. Porsche is the 34th-biggest auto company; its 11,384 employees produced 102,602 vehicles in fiscal 2006. Porsche’s buying into VW in a big way just didn’t look right, and many car guys were dubious. As one analyst put it at the time, “The mouse dances with the elephant.”
But in the 22 months since the mouse asked the elephant to the ball, the match looks like one made in heaven. Porsche’s stock has climbed almost 200%, and VW’s has more than doubled.
Here’s where it gets interesting:
Given his track record, Wiedeking might be expected to have a free hand in shaping VW’s future. He does not. There is a second party to this transaction: Ferdinand Piëch, CEO of VW from 1993 to 2002, current chairman of its supervisory board, and a man with his own convictions about how VW should be run. Oh, and he’s the grandson of Ferdinand Porsche, who designed the first Volkswagen Beetle, and the nephew of Ferry Porsche, who founded the sports car company that bears his name. The Porsche and Piëch families control 100% of Porsche’s voting stock. That makes Piëch Wiedeking’s boss.