Despite their differences VW and Porsche's histories were intimately intertwined. It was Ferdinand Porsche's engineering company that in the 1930s designed the first Volkswagen which later became known as the VW Beetle. A few years later the first Prosche debuted with some of the same components used on the VW Beetle. More recently Porsche and VW had built cars that shared platforms and components. In addition to sharing research and development the two companies' leadership shared familial bonds. Legendary German-Austrian engineer Ferdinand Karl Piech the grandson of Ferdinand Porsche was the chairman of Volkswagen's supervisory board and the Porsche and Piech families together owned 50% of Porsche's shares and 100% of its voting stock. Their alliance based on old family relationships allowed both companies to develop technology jointly without concern for confidentiality.
The ability to scale and create synergies across a number of areas were two driving forces that led Porsche to secure its partnership with VW. As Wiedeking explained electronics was one area of particular interest: "Electronics account for 30% to 35% of our development costs. Spreading this investment over 2 million cars instead of Porsche's 100,000 will make a big difference and the components will be cheaper. Furthermore the capital intensity of R&D and required fixed assets in new technologies would be increasing making it increasingly difficult for a premium-only OEM to survive unless operating in the context of a larger OEM. Forming closer ties with VW would also enable Porsche to benefit from VW's mire fuel-efficient technologies at a time when new emissions regulations would come into effect.
On a more macro level by acquiring VW Porsche was helping protect itself from the ups and downs of the auto sector. As one industry observer wrote, "A huge mainstream global car company like VW was in a better position to weather any marketplace vagaries than a luxury brand like Porsche."
While Porsche looked at the VW takeover as a way to leverage synergies Porsche and VW would exist as two separate companies that would sit under a new holding company called Porsche SE. (See Exhibit 2.)
A Repeat of Daimler-Chrysler?
While many in the industry believed that Porsche's acquisition of VW was a wise move others expressed concern that VW would prove to be a distraction for Porsche, particularly at a time when the company was about to enter another new car market with its luxury sedan the Panamera. As one industry observer wrote "As we've seen at Daimler-Chrysler when cultural issues are in play the products can suffer and when the products suffer so does everything else at a car company.
However Wiedeking was adamant that the Porsche brand and culture would remain well protected: "Believe me, if you mix the Porsche guys with the Audi guys and VW guys you will have trouble. Each is proud to belong to his own company. My Porsche people are very proud of what they have achieved. They don't want to build a bastard in the future. They want to build a Porsche.
But whether keeping Porsche and VW as separate operations under a Porsche holding company would adequately protect the engineering and design talents that Porsche was known for was not certain. And whether the carmakers that PEG had provided services to in the past would rethink their relationship with Porsche now that it would be producing a number of competing car models was also not certain. What was certain was that Porsche was no longer a small, nimble, carmaker focused solely on the luxury sports car marker. With VW now under its wing, Porsche would soon be everywhere.