Porsche and Piech Families Want To Keep VW On A Tight Leash

While Volkswagen is a publicly traded company, it is majority controlled by Porsche SE, which is owned by the Porsche and Piech families. According to sources close to the matter, the families are looking to get VW back in shape by influencing decisions and being more involved.

Volkswagen has had a rough time since the Dieselgate scandal erupted and, according to Reuters, the Porsche and Piech families haven’t been impressed with outgoing CEO Herbert Diess. Apparently, the families didn’t appreciate his straightforward and candid style despite his various achievements while at the helm. According to an unnamed source, “they want to keep a closer eye on the implementation of the strategic guidelines.” And another source said that “The families are actively involved – an ability they have long been believed incapable of.”

This is evidenced in Oliver Blume’s new appointment as Volkswagen’s new CEO.

If the name Oliver Blume is familiar, it’s because he has been Porsche’s CEO since 2015 and is the families’ “preferred candidate” for the Volkswagen top job. Having a Porsche company man at the head of Volkswagen should give the families tighter control over the Porsche brand.

Blume’s position has drawn controversy, though, because he will remain CEO at Porsche and is expected to be vital in pushing through the initial public offering (IPO) of Porsche AG. The Porsche-Piech clan clearly wants Porsche to separate itself from Volkswagen, but it was recently shown that Volkswagen investors aren’t convinced.

While the sale of Porsche would bring an influx of cash to Volkswagen, plenty of investors believe the axing of Deiss will hurt an IPO and aren’t convinced that Blume can lead the Volkswagen Group with Porsche going public at the same time.

If those fears come to fruition, the Porsche and Piech families could shoot themselves in the foot. Volkswagen is working to transition to selling only all-electric vehicles like the ID.4 while Porsche seeks independence in its decisions and products. A lowball IPO could hurt Volkswagen and Porsche at a pivotal time in their histories.

“The structure of the IPO primarily fulfills the families’ interest in further tightening their grip on Porsche, and they will not be dissuaded from this plan,” said Hendrik Schmidt, a corporate governance expert at DWS (DWSG.DE), a shareholder in Volkswagen and Porsche SE.

If the IPO goes ahead as planned, the Porsche and Piech families will have a blocking minority in Porsche and regain some of the power they have been craving ever since VW took over Porsche in 2009.