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HarleyEarl

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by Peter M. DeLorenzo


Piech's Folly continues to haunt Volkswagen.

Detroit. Well, that was special. With the VW Phaeton being fazed out of the U.S. market by next summer, the dismantling of Ferdinand Piech's ill-fated and disastrous strategy to take the Volkswagen brand up-market is well and truly underway. Wolfgang Bernhard, the ex-Chrysler group and Mercedes-Benz star who inherited the mess that Piech left, knew before he even started at VW that the Phaeton would have to go. "Piech's Folly" was the doomed strategy hatched whereby the then-VW chairman envisioned VW taking on Mercedes-Benz and BMW at the top of the luxury-performance food chain. The Phaeton was to be Piech's star-studded platform to showcase the VW brand as being worthy of being mentioned in the same breath as the two German automotive superpowers, but instead, the Phaeton became nothing more than a monument to his maniacal, ego-driven delusion. The Phaeton was not only the answer to the question that absolutely no one was asking, it was a rolling testament to just how far one person's dominance at the top of a company - if it's the wrong person - can have a devastating effect for years to come.

It didn't have to be this way, of course. Ferdinand Piech, the grandson of Ferdinand Porsche, was one of the most gifted automotive engineers of his generation. Responsible for some of the most famous Porsche racing cars in history, including the 908/3 and the 917 just to name a few, Piech's talent was undeniable. But as is so often the case, a talent for one part of the automotive business does not necessarily translate to Big Picture managerial skills - and Ferdinand Piech was the poster boy example of this phenomenon.

In his blind pursuit of fame and glory for VW in the luxury-performance arena, he completely took his organization's eye off of the ball and crippled the brand for years to come. Instead of having his designers and engineers focus on VW's core automotive products (Jetta and Golf), Piech dispatched legions of his underlings to chase his pipedream of automotive immortality. And while the entire VW organization tried to prove the mettle of Piech's Folly, the predictable result ensued - the core products suffered, VW quality scores plummeted, and the U.S. dealers bore the brunt of Piech's misguided crusade.

The new Golf and Jetta weren't just late to the U.S. they were several model years late. And to make matters even worse, VW dealers were fending-off irate customers who were saddled with quality problems from the get-go. And those customers rewarded VW for their callousness by abandoning the brand in droves - never to come back.

But the ultimate insult to VW's U.S. dealer body was the fact that the Phaeton appeared to have been created on a whim, with no rhyme or reason given to the fact that not only would the Phaeton be a dramatic leap upward in price and class for the VW dealers, it would be coming out of left field for VW's core customers. But as VW dealers and the rest of the automotive world would soon find out, the Phaeton was created on the whim of one man - Ferdinand Piech. A man who was accountable to no one and whose misguided "vision" would almost destroy an entire company. It's truly remarkable how similar Piech's situation was to Juergen Schrempp's tenure at Mercedes-Benz - two uber powerful men with no accountability and runaway delusions of grandeur on top of it. A classically lethal combination if there ever was one. As we say around here - "NVG" (Not Very Good).

But Piech's grand plan for the VW brand had another sinister dimension to it that threatened to have even more dire consequences: it completely ignored the fact that taking VW up-market in the U.S. would seriously undercut Audi's position in this market. Audi was finally starting to show sustained progress after taking years to recover from the "60 Minutes" unintended acceleration debacle, and now here was Piech, with his strategy to have VW competing against Audi in the North American market - making absolutely zero sense to anyone outside of his immediate agreeable entourage.

The rest, as they say, is history. Piech was kicked "upstairs" to become chairman of VW's all-powerful Supervisory Board - a position where he has proved yet again that his delusional thought patterns are still intact, as he continues to wreak havoc on VW by helping orchestrate Porsche's increase of its ownership percentage of VW, unleashing a conflict of interest can of worms that defies description. The guy just doesn't know when to quit, which is why there's a growing disenchantment with Piech's presence on the VW Supervisory Board.

As for the Phaeton, it was delivered to tepid reviews. Overweight, overwrought and over-burdened with enough technology to confuse even tech geeks for days, the Phaeton was a car in search of a brand - because absolutely no one bought that the VW logo belonged on the front of it. In short, there was never a business case for the car - except in Piech's inflated head.

The Phaeton was the wrong car from the wrong company at the wrong time. Which, come to think of it, matches its "visionary" creator perfectly, because Piech was the wrong guy at the wrong car company at the wrong time.

Piech was allowed to pursue his "Folly" to the detriment of an entire company, and his corrosive "vision" will continue to haunt VW for years to come.

Thanks for listening, see you next Wednesday
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Can't really argue with the meat of that piece. The Phaeton really was out of the blue and made no sense whatsover sitting in VW lots. Regardless of how great a car one may consider it, it didn't do anything for VW; instead, robbed them of time, effort, and money that could've been better directed at improving quality, reliability, and sales & service.
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