Pride Goeth Before a Fall . . .

Ferdinand Piëch (below) was forced out as the chairman of the supervisory board at Volkswagen after having tried to oust Martin Winterkorn, the company's CEO.  The fall of Piëch, who turned 78 years old this past April 17, ended an era at Europe's largest automaker and one of Germany's most storied manufacturers.  Piëch, a grandson of Beetle designer Ferdinand Porsche, had been the leader of VW for 22 years, first as Volkswagen's CEO from 1993 to 2002 and then on the supervisory board thereafter.  He made the company a global powerhouse but ultimately lost his touch as VW tried to become a leaner and more profitable company.  

Volkswagen has been having trouble all over the globe, not just in the United States, where consumers find their products to be stodgy and out of step, but in emerging markets like Brazil and Russia.  Also, its production costs in Europe are too high and its profit margins are too low.  Piëch apparently became dissatisfied with Winterkorn's attempts at getting a hold of the situation, tried to pull the rug out from under the CEO and ended up offending union leaders and labor-friendly shareholders.  They, in turn, ended up withdrawing support for Piëch and then backed Winterkorn.  Piëch's wife, also a member of the board, resigned as well.

VW is governed by a complicated labyrinth of interests, with the Piëch and Porsche families controlling just over half of the votes on the company's board. The German state of Lower Saxony, where VW's hometown of Wolfsburg is located, owns a 20 percent stake in the automaker, with unions having half of the twenty seats on the supervisory board.  Getting anything done in a timely matter and streamlining processes have never been VW strong points, and the problems of late have made that clear.  In recent years, Volkswagen has expanded and increased sales, but its profits have been minuscule and it needs to cut costs totaling nearly $12 billion.

The United States remains a sore point.  Forty years after VW's problems in America began with the early reliability issues of the Rabbit, VW has improved quality but has kept misreading the desires of American customers.  Always behind the curve with antiquated stereo systems - good for old-school customers like me but not good for the majority of car-buyers - Volkswagen can't seem to get the most basic things right, like the size of its cupholders.  When minivans were the rage, VW already had a minivan, the Vanagon, and was ready for the competition - except that Chrysler set the standards for minivans with a more modern vehicle, making the Vanagon look like a throwback to an earlier time.  When Volkswagen came out with an Americanized family sedan (the NMS Passat) to do battle with the Honda Accord and the Toyota Camry, the focus in America switched to SUVs.  When VW reclaimed Dr. Porsche's hybrid-engine technology following a decades-long focus on diesels, gas prices in America started falling as fast as Jetta sales.  Speaking of which, Volkswagen decided that offering a more basic, less expensive, Honda Civic-like Jetta would be an easier way to draw customers than offering the sort of "like-a-BMW-but-more-affordable" car the Jetta had always been, and so it introduced the current, cheaper Jetta in 2011.  All VW did was offend die-hard brand loyalists.  After some brief enthusiasm by casual VW customers, Jetta sales cooled off; the car has been improved, but it still rides on a dated platform with the sort of jellybean styling that Americans long ago decided was boring.  Volkswagen is now playing catch-up in the SUV market even as loyal customers wish VW would stay true to its German roots and stick to compact driver's cars.

Small wonder that VW is adrift in the States. But the company is now losing sales in China, where, in the mid-1980s, Carl Hahn, Volkswagen's then-CEO, cut a deal to build cars there, seeing the potential for the Chinese auto market there to grow. China is now the largest auto market in the world.

Winterkorn has his work cut out for him as he looks to the future, in the States and elsewhere.  Many people believe he has a fighting chance, now that Piëch is no longer in a position to enlarge the company through acquisitions of smaller ones - "empire building," as it were - and Winterkorn can focus on profitability.  With Berthold Huber, a former president of the IG Metall labor union and a member Volkswagen's supervisory board, serving as interim board chairman until a permanent successor can be chosen in May, Winterkorn should receive the support he needs to move VW forward.  It won't be an easy task, given the company's complicated corporate structure (which I won't even attempt to explain).  With some give and take from all sides, and some old-fashioned pluck, VW should make it through all right.  But the absence of Piëch, who treated Volkswagen like the family business it was and was instrumental in spearheading some of its finest cars ever, will no doubt be still felt.