by Andrea Hiott
By the end of 2008, it was clear that Porsche now needed to be bailed out. And it wasn’t long before Volkswagen owned 49.9 percent of Porsche, and Porsche, though no longer in fear of bankruptcy, lost its potential claim to VW. Ferdinand Piëch was the figurative head of VW as all this took place, though he had stepped down as CEO in 2002 to become chairman of the supervisory board; Wendelin Wiedeking, the CEO of Porsche, was forced (many believe by Piëch) to leave. To a large degree, Wiedeking (backed by the chairman of the Porsche board, Wolfgang Porsche) was behind the Porsche move to take over VW, mainly because Wiedeking believed that VW’s business model was outdated and needed to be changed. Wiedeking became a sort of pawn in the battle between VW and Porsche; thus his final resignation was the sure sign that VW and Piëch had “won.” But in truth, there was no clear winner or loser, just a monumental shift in the relationship between VW and Porsche.
Negotiations about how this new VW/Porsche relationship will be structured are still continuing as I write. If the current deal goes through, Porsche will receive billions of dollars from VW to pay off its debts. The Porsche and Piëch families will get 50 percent of the merged VW/Porsche company; thus, VW (which once had only Ferdinand Piëch as the family representative) will now be partly owned by the Porsches. In turn, the Porsches will have less direct control of the Porsche company itself. The German state of Lower Saxony would still keep 20 percent of VW, the Emirate of Qatar would get another chunk based on its dealings with Porsche, and the rest of the company will remain with the investors and stockholders. Porsche will become a “daughter” company of VW, and thus Porsche will be VW-owned.
What is certain in all this maneuvering is that the two companies are once again owned in part by the same family—and both the Piëchs and the Porsches have benefited from this. As Dietmar Hawranek wrote in Der Spiegel in 2009, “The assets of the Porsches and Piëchs have multiplied.2 Before the investment in Wolfsburg, they owned 100 percent of Porsche, a small sports-car maker. Now they own more than half of the world’s second-largest automobile group. As dirty as it was, it was an extraordinarily profitable family feud.… The merger places the German-Austrian industrialist clan on a level with the world’s biggest corporate dynasties: the Fords, the Agnellis, and the Peugeots.”
So for the moment, it seems the VW business model will prevail, though this (like everything else in the story) is more complex than meets the eye, and is currently in the midst of change. Volkswagen AG is one big company made up of many individual, smaller ones, and so far, this setup has worked in large part because Volkswagen does not infringe on the other brands, but allows them their freedom in production and design methods, even as the companies share certain mind-sets and technologies. Hopefully, the same will hold true for Porsche. The challenge for Volkswagen AG is to find a way to continue growing, even as it champions basic German traditions and deeply rooted work methods like joint responsibility and participation (Mitbestimmung and Mitverantworung). Until now, the guiding force of VW has been sustainability rather than huge profits—even though the huge profits have come—so while they haven’t made as much money as they might have made with a smaller cost base (in other words, had their business and manufacturing philosophy been predominantly based on the “lean model” as developed by Toyota, and as used by Porsche), they have made a profit, and that’s been enough. At the same time, the management at Volkswagen AG seems to know it must be flexible, that they cannot restrict change as they continue to grow.
Already, Porsche and VW are intermixing in new ways: Michael Macht, an expert in lean production who was once the CEO of Porsche, has recently been named to head the Volkswagen Group’s global network, for instance, and Volkswagen AG has named Matthias Mueller, previously VW’s top car strategist, to be the new CEO of Porsche. But the true test of Volkswagen AG might be how it merges these differing structural models into a new strategy, one that remains true to the company’s history and methodology while at the same time evolving certain aspects to reflect its new acquisitions. In one sense, the traditional Volkswagen business model has demanded a slowness that can be frustrating. But in another sense, this slowness has been the company’s strength, keeping it from overreaching itself, guaranteeing good engineering and good quality work.
German-born economist Fritz Schumacher once wrote, “Character … is formed primarily by a man’s work.3 And work, when properly conducted in conditions of human dignity and freedom, blesses those who do it and equally their products.” Every big company is now trying to find the right balance in this sense—the balance between becoming big while at the same time attending to the details, because the details are what will ultimately make or break them—and VW is no different. In the global automotive market, VW is second only to Toyota when it comes to profits and units sold, and VW’s chief executive has promised to surpass Toyota by 2018. Volkswagen now talks about becoming the biggest and most profitable car company in the world. In fact, this has become a kind of slogan of VW’s, and lately, they say it often.
There is something rather puzzling about VW’s constant voicing of such a desire; it strikes one as out of step with the overall VW approach from the past. On some level of course, every car company wants to be the top car company in the world. But if VW has to change its entire focus in order to do so, it’s doubtful it will find much satisfaction in such a victory, or that such a victory will be long lived. If VW is able to continue with its system of checks and balances, to make good products and treat its workers well, then one can only wish them luck. “We always need both freedom and order,”4 to quote Schumacher once more. “We need the freedom of lots and lots of small, autonomous units, and, at the same time, the orderliness of large-scale, possibly global, unity and coordination.” If Volkswagen can keep its ego at bay, it could be a terrific example of how big companies can step into the future without losing the vital ability to think small.
The story of the Volkswagen is part of the human story, not just the story of any one country, time, family. In Germany, the Beetle was transformed from the pet of a dictator who unleashed extreme violence and destruction on his country and the world to an object that represented new economic and social potential. And that immigrant Bug that came to the United States only to be rejected eventually became a symbol of transformation and hope; it became American in a very real way. The Beetle is just a car, to be sure. But its story is not just a story, it’s our story, the story of coming from humble and diverse beginnings, of standing strong in the face of adversity, of having faith. And that’s where the magic is.
We are always trying to find what moves us, and to figure out the best way to move. And we’re always thinking about where we want to go, without forgetting where we’ve come from. While it’s clear we will find, and must find, new ways of mobility in the coming years, it’s hard to say what changes will come with the next decade, or what mode of transportation and energy will be the best one for our planet and our health. We have to develop a new perspective about energy, and our new leap into the future requires a solid understanding of the details of our past. In that sense, it helps to know the story of how we have progressed so far, and to know that we have progressed. It took Lewis and Clark two and a half years to travel from one side of the United States to the other on their first cross-country journey. Later, with horse and carriage, it took a good six months to make the same trip. Trains cut that time down to just weeks. Then came cars, allowing for individual mobility from any point A to any point B.
At each one of these transitions in movement, there was a corresponding revolution in thought. The story of the Volkswagen exemplifies that sort of change. About a century ago, many people thought the idea of a “People’s Car” was impossible: It seemed irrational to propose that the majority of the population in America or Germany or so many other countries across the world would actually want, and be able, to own their own cars, to have such power of mobility within their immediate control. But if there’s one thing that the story
of the Beetle shows us, it’s that we should be prepared to be amazed. If our experiences with the mobility change as much in the next century as they have in the previous one, where will we end up? In that regard, the Beetle’s story proves that anything is possible: The craziest ideas can be the ones that become the most valuable, and the best answers can be the ones we least expect.
The discussion today about the best way to move forward is urgent, but it is not new. Ferdinand Porsche created electric vehicles and hybrids over a hundred years ago. Today, very important innovations are being made as companies, scientists, and concerned citizens all over the planet explore new ways for us to power ourselves, experimenting with biofuels, biomass, wind and solar power, plug-in hybrids, electric vehicles, and hydrogen power. There are also strides being made toward developing new forms of public transportation and infrastructure, and more energy-efficient buildings and homes. And of course there is the exciting possibility of solutions we haven’t discovered yet. One thing that does look likely, however, is that our future will consist of all of the above—that these new forms of mobility will coexist, and that it will not be any one new energy source that will save us, but rather a change in our mind-set and awareness, one that allows for numerous small solutions rather than one big fix. Because another thing the Beetle’s story proves is that we can hold contradictory notions in our minds at once, indeed, we must, in order to grow. In other words, we have to learn how to do big things by noticing the details, by being clear and present. By thinking small.
… And Going …
There’s a famous old Volkswagen television commercial from the sixties that shows an original Beetle driving off into the distance while a voice in the background says “diese Wagen läuft und läuft und läuft und läuft und läuft …,”1 “this car goes and goes and goes and goes and goes …” No one knew how true that statement would become. Twenty years after it had ceased being sold in Germany and America, the Beetle came back to life. And now, it’s come to life again.
And the world has changed in the meantime. In 1998, we were just getting used to the Internet and email, but today, as the 2012 Beetle arrives, we have practically created a whole new virtual world. And the economic, political, and social structures of that world reflect our new connection and scope. The real world is the same size, but we are much more aware of each other, and information, images, and trends get transported at the speed of light. The car is growing up with us: The first time many people heard of the 2012 Beetle, after all, was in a Super Bowl advertisement in February 2011 that millions of people viewed on YouTube. Soon after, the car was unveiled in three countries at once with live webcasts in New York City, Shanghai, and Berlin. Those three locations alone, and the fact that such a PR event was even possible or profitable, shows how the world has changed, and also what markets are most important to VW now.
But the 2012 Beetle is also a testament to the fact that there are some things that never change. For one thing, the market still revolves in large part around the ways and means by which we move and communicate. But there is another thing too: When it came to creating the third generation of the Beetle, the designers went all the way back through history to Ferdinand and Ferry Porsche, and all the other engineers who worked on the first VW and the first Porsche in the Porsches’ workshops and garages. The designers of the 2012 Beetle kept an original model of the Beetle close at hand, and if you place the old and the new next to each other, you will see the family resemblance, especially in the back of the car (what is called the C-pillar, the part behind the rear doors). The front of the car has been lowered and stretched, and the windshield has more of a mischievous tilt. The back of the car has been stretched too; the rear fender is fatter and more masculine, and the wheelbase is also bigger so the car has a bigger stance. The whole car looks energized, still playful, but ready to pounce. The rear headlights are no longer big circles, but rather curvy U-shapes, and the wheels are big 10-spokes, about 19 inches in diameter. The overall effect of these changes is that the 2012 Beetle looks a heck of a lot like the Porsche 356, the first sports car sold by Porsche, and one that Ferry built using his father’s original Beetle design.
The animated black beetle from the 2011 Super Bowl ad that received millions of hits on YouTube. (photo credit bm.1)
In designing the 2012, Volkswagen group design chief Walter de Silva and Volkswagen brand design chief Klaus Bischoff wanted to develop a car that returned to the VW roots. But the 2012 is no “small car”—it’s 71.2 inches wide, 58.5 inches tall, and 168.4 inches long, which means it is 3.3 inches wider, half an inch lower, and 6 inches longer than the New Beetle from 1998. But the 2012 Beetles also come with built-in spoilers; the inner painted carbon–look dashboards remind one of the original Beetle as well, although they removed the classic flower vase that has been around since before the car became the hippie car of choice. Ambient lighting is available in a choice of red, white, or blue. The car offers three engines: a 2.5L gasoline five cylinder, a 2.0L TDI Clean Diesel (the most fuel-efficient Beetle ever, VW says), and a 2.0L TSI turbocharged gasoline engine. Maybe one day there will be a hybrid Beetle too, especially since Porsche created the world’s first hybrid over 111 years ago. But for its size and comfort, the car gets good gas mileage, an average of 33 miles per gallon.
The twenty-first-century Beetle. The 2012 model has elements of the early Porsche design. (photo credit bm.2)
Themes recur. And just as it was for Nordhoff, Volkswagen’s current desire to be a success in America is part of the 2012 push. Germany is still trying to understand America, and to have a presence in its market. During the unveiling of the 2012 model, the CEO of Volkswagen of America, Jonathan Browning, told reporters that “The U.S. is the most important market for the Beetle2, and it is a critical part of the new chapter we are trying to write for Volkswagen in the U.S. and worldwide.”3 VW is spending tons of money in the States now—including $5 billion on a new car plant in Chattanooga, Tennessee, its first American factory since the 1980s4.
But this plan will work only if Americans buy the cars, and it’s a much more complicated kind of world now, a fact that is reflected in the closer ties between branding and design that have come to exist. Today, because technology advances happen quite rapidly, and are available to the masses much more quickly, when it comes to selling a product, it’s not only a matter of being on the cutting edge of technology; it’s also a matter of having a recognizable brand with a comprehensive design (Apple is a very good example of this).
In a 2009 documentary about design called Objectified,5 German designer Dieter Rams names a few of the “rules” that go into making a good design. The ones that struck me as particularly relating to the classic design of the Beetle are the following: Design is a matter of clarity, of being clear; design is innovative; design makes a product understandable; good design is honest; design is long-lived; and finally, good design is “as little design as possible.” The design of the original encompassed all these rules, and perhaps the 2012 will prove to as well.
But brand is also a matter of story. As Allen Adamson wrote online for Forbes magazine on April 25, 2011, “While consumers do appreciate knowing6 how fast a car can go, and whether they can fit two sets of golf clubs into the trunk … this isn’t what drives car-buying behavior. It never has been and never will be. Instead, it’s the whole brand story that steers people’s rides. That’s why smart auto companies, smart auto branders, make sure that they’ve got a genuinely distinctive and compelling story to tell about what makes their brand of car different in a way people care about. The best of the best know how to weave the rational and emotional aspects of the story together in a way that really sets their brands apart.… ”
An early dealership in the United States, selling Porsches and Volkswagens. (photo credit bm.3)
In that sense, brand (and story) and design are linked. A design that is honest and long-lived and clear reflects a brand that has those same characteristics: The design is inspi
red by the product, after all, and so the two are intimately linked.
In that same documentary I mention above, one designer quotes Henry Ford as saying that “every object tells a story, if you know how to read it.” Right now, our story is one of a global, increasingly connected, increasingly diverse world, a world in which no one country can really “own” its products, because those products take on a life and story of their own once exposed to the differing cultures that create the global market, a market that now must be accurately accessed by a car company for that company to succeed. And the Beetle is certainly a car that belongs to the world. Germany is the caretaker, but no longer does it really own the Beetle or its story. When the 2012 Beetle appeared to the public for the first time on April 18, 2011, it was called “the darling of the New York Auto Show”: The car is still an object we want to love. Its story is still being written. In that sense, the primary driving force of the Beetle’s innovation and success is not just the profits, or competition, or the marketplace, it’s how the car fits into the narrative of its customer’s lives.
It could be telling that the twenty-first-century Beetle looks a lot like a Porsche. Perhaps when VW says it is “going back to its roots,” that means it is ready to fully connect with its own story, the one that began with Ferdinand Porsche. And in a wider context, as citizens and consumers, perhaps we are likewise approaching a moment where we can reevaluate our history and mobility with a deeper clarity. Like that famous T. S. Eliot poem “Little Gidding,”7 the car’s story is coming back to where it started, but knowing that place for the first time. And perhaps we are too. After all, the truth has always been true. And as the story of the Beetle shows, the greatest moments happen—collectively and individually—when we find new ways of bringing that truth into view.