A fatal crash for Porsche and Volkswagen?

Matthew Lynn

4 July 2009

Matthew Lynn unravels the three-generation feud behind the crisis that has overtaken two of the mightiest names in German car-making and threatens to ruin both of them

Gary Lineker once observed that football was a simple game in which 22 men ran around the pitch, and then the Germans won. Much the same could be said of the car industry. It’s a simple enough business, in which everyone spends billions on big factories and flashy dealerships. And then the Germans make all the money.

Until now, that is. In the last year, through a spectacular mixture of family pride, in-fighting and historical resentment, two of the mightiest names in German industrial history, the car-makers Porsche and Volkswagen, have steered themselves to the edge of cata-strophe. It’s a story of hubris on an epic scale. It’s also a reminder that one reason the Germans are so sniffy about ‘Anglo-Saxon’ wheeler-dealer capitalism is because they are just not very good at it.

The Volkswagen group is Europe’s largest car manufacturer, including not just the ubiquitous VW marque, but also Skoda, Seat, Audi and our very own Bentley. From its Wolfsburg headquarters in Lower Saxony, Volkswagen has always been emblematic of postwar German industrial strengths: methodical, well organised, consistent in quality, if a little slow and conservative. The ad agency that came up with one of the most celebrated slogans of the 1980s — ‘If only everything in life was as reliable as a Volkswagen’ — was talking about the ubiquitous Golf, but could have just as easily been talking about the company itself. It stood aloof from the financial games played by other conglomerates. It even had its own special rules: the so-called ‘Volkswagen law’ that protected it from takeover through a blocking stake held by the state of Lower Saxony.

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