|September 23, 2015|
Volkswagen's Chief in the Vortex of the Storm
|Striding past a car show model, Martin Winterkorn, trailed by aides, examined a Hyundai i30.|
He poked the hatchback with a measuring device he had in his pocket, then squeezed his stocky frame into the driver's seat. He ran a finger along the interior plastic, then fiddled with the adjustable steering wheel.
"It doesn't clank," Mr. Winterkorn said to a member of his entourage, with a note of annoyance in his voice. "BMW can't do it. We can't do it. They can."
The scene from the Frankfurt auto show in 2011, captured on a YouTube video that has gone viral, has become famous as an illustration of the Volkswagen chief executive's attention to detail and his insistence on technical excellence.
It was a display of the determination that helped Mr. Winterkorn, 68, lead Volkswagen past Toyota in the number of cars sold this year, making it the world's largest carmaker --- at least for now.
But now Mr. Winterkorn's detail mania could become a liability, as he faces mounting scrutiny over the revelation that millions of diesel models contained software designed to evade emissions regulations.
The widening scandal has become a threat to the empire that Mr. Winterkorn helped build with his onetime mentor, Ferdinand Piëch. Though it still manufactures the kind of practical cars for the masses that made Volkswagen famous, the company today also makes Porsche and Lamborghini sports cars, Bentley luxury cars and over-the-top Bugatti sports cars that sell for more than $1 million.
Until the deception became public on Friday, Mr. Winterkorn's future with Volkswagen had seemed more or less secure after he emerged the victor of a bitter power struggle this year that ended with the ouster of Mr. Piëch, the company's longtime chairman, who was sometimes described as Mr. Winterkorn's stepfather.
Mr. Piëch, a member of the powerful Porsche family that owns a significant stake in Volkswagen, began pressing for Mr. Winterkorn's ouster in March --- ostensibly because he was unhappy with the company's failure to expand its market share in the United States.
But Mr. Piëch's campaign to remove Mr. Winterkorn failed to win the support of other key Volkswagen shareholders, including a cousin, Wolfgang Porsche, as well as the German state of Lower Saxony, which owns a 20 percent stake. In April, Mr. Piëch --- a grandson of the creator of the VW Beetle --- stepped down.
With Mr. Piëch's influence diminished, Mr. Winterkorn pushed ahead with a strategy of improving profit margins at Volkswagen, which continues to struggle to make inroads in the United States and whose growth has stalled in emerging markets like Brazil, China and Russia. The plan includes the discontinuation of unprofitable VW models and the slashing of 5 billion euros, or about $5.5 billion, in operating costs by the end of 2017.
Just two weeks ago, a steering committee of the board had voted unanimously to extend Mr. Winterkorn's mandate, which was due to finish in 2016, until the end of 2018.
Volkswagen's traditional culture of highly centralized decision-making could make it difficult for Mr. Winterkorn to deflect suspicions that he and other senior managers at the company's headquarters in Wolfsburg, Germany, were aware of the software manipulations at the heart of the scandal, experts say.
"This wasn't a small engineering decision that slipped by management," said Jo-Ellen Pozner, an assistant professor at the Haas School of Business at the University of California, Berkeley. "It seems to me like something had to be approved by at least a division head."
With an annual salary of more than €16 million, Mr. Winterkorn is Germany's highest-paid chief executive. Since taking the helm in 2007 --- before the software began appearing in the 2009 model year diesel cars --- he has enjoyed the support of Chancellor Angela Merkel as well as the automaker's powerful workers' council. But on Tuesday, it was not clear whether Mr. Winterkorn, whom colleagues refer to by the nickname Wiko, would be able to count on their continued support.
"If it emerges that Winterkorn was involved in the issue, then he would step down on his own," Bernd Osterloh, a Volkswagen board member and labor leader who has until now been an ally of Mr. Winterkorn, told reporters in Frankfurt on Tuesday. "We can't afford such reputational damage."
Mr. Winterkorn has nurtured a passion for cars since his childhood in Leonberg, in southwestern Germany, home to a Porsche test site where he used to watch the German sports car maker's autos whiz by on a track near his home.
Mr. Winterkorn, who was born in 1947, studied metallurgy and physics at the University of Stuttgart, later earning a doctorate in metal physics.
Mr. Winterkorn began his working life at Bosch, the German engineering and electronics group, and in 1981 entered the automobile industry as a quality controller at Audi, one of the Volkswagen group's stable of 12 brands.
For 30 years, he worked successfully alongside Mr. Piëch, once describing their relationship as a partnership where Mr. Piëch was responsible for conceiving new ideas while Mr. Winterkorn was in charge of transforming them into roadworthy vehicle designs.
Yet despite decades of working together, the two men never became close friends, always maintaining a professional distance and addressing one another using the formal German word for you, "Sie."
All the while, Mr. Winterkorn has determinedly raised his public profile, appearing at industry events like the annual Detroit auto show and giving bold proclamations at lavish corporate presentations.
At the show in 2013, he captivated a large contingent of journalists at an invitation-only event scheduled the night before press previews at the show.
"VW won't cut back," he said. "We will stay in the fast lane," he added, referring to the company's growth plans in America. "VW grows with the challenges. And we continue to do so, even when times are tough."
One executive within VW, who spoke on condition of anonymity, described Mr. Winterkorn as extremely meticulous about technology and how the company's cars were marketed to the public.
The executive said that employees waited nervously for Mr. Winterkorn's ceremonial tour of the company's auto show exhibits.
Always accompanied by teams of support personnel, he was known for closely examining every car on display, from the type of wheels to the interior color combinations.
"It was like the general had arrived to inspect the troops," the executive said.
Mr. Winterkorn, a Porsche family outsider, has managed to maintain his position by carefully navigating the often-complex machinations of various factions that have jousted for control of the group.
In 2005, Porsche set out on a cunning plan to conquer the much larger Volkswagen. But that plan required borrowing billions of euros --- a move that enlarged its debt load two years later, just as global capital markets froze up when the global financial crisis hit.
Financially weakened, Porsche was forced to accept integration into Volkswagen in 2008, further consolidating Mr. Winterkorn's power. Volkswagen ultimately assumed full ownership of the Porsche brand in 2012.
Now made vulnerable by the scandal, it remains unclear whether Mr. Winterkorn can count on the continued support of past allies, who include Stephan Weil, the prime minister of Lower Saxony who told reporters on Tuesday that he did not wish to "prejudge future discussions" about Mr. Winterkorn's future at Volkswagen or discuss any "possible consequences."