Carl Hahn - Chairman of Volkswagen AG (1982-1993)

Chairman of Volkswagen AG (1982-1993)

Hahn left VW in 1973, to lead the German tire company Continental AG, but returned in 1982 to become chairman of Volkswagenwerk AG. Under his leadership, Volkswagen bought a majority interest in the Spanish car brand SEAT in 1986 after a cooperation agreement in 1982, and eventually owned the entire company by 1990. After the fall of the Iron Curtain, in 1991 Volkswagen entered as a foreign partner in a joint venture with the Czech company Škoda Auto. Hahn's acquisitions made Volkswagen a global force, and affirmed its place as Europe's largest automaker. In 1985 alone, Hahn was able to push VW's earnings up 140 percent to $225 million based on sales of more than $21 billion, and he was credited for pushing VW beyond the one-car strategy left over from the era of air-cooled Beetles and the early success of the Volkswagen Golf Mk1 in the 1970s. The second-generation edition, introduced in Europe in 1983 and in North America in 1984, was one of the bestselling cars of the 1980s worldwide. Two out of every three Volkswagens sold globally were Golfs. Hahn also cleaned up VW's business practices, uncovering an inside foreign exchange fraud, but its $300 million cost to Volkswagen ate into the very profits Hahn had helped the company make.

Ironically, given's Hahn's earlier success in leading Volkswagen of America, VW sales in the United States dropped during his tenure as VW chairman, from 171,281 units in 1982 to a paltry 75,873 ten years later (1992), largely to due intense competition from the American and Japanese carmakers. Sales in Canada were hardly better. Substandard product was another issue in North America. Soon after Hahn became chairman of VW, he tested an American Volkswagen Rabbit (the North American name for the original Golf) built at VW's Westmoreland Assembly Plant, which had opened in 1978, and he was deeply disappointed. "It felt like a Chevrolet," he complained. "If you want a Chevrolet, you should go to General Motors." The car had been re-engineered to drive like an American family sedan, with softer suspension and shock absorbers. Hahn fired Volkswagen of America president James McLernon, a former Chevrolet engineer who had been tapped by VW to get the Westmoreland plant up and running. Hahn then brought in new management at Volkswagen of America and kept the Westmoreland factory open to produce the second-generation Golf as a hedge against currency fluctuation between the German mark (DM) and the U.S. dollar, but inefficient production and soft sales in North America caused VW to close the plant in 1988.

It was widely believed by some observers, in fact, that Hahn had no desire to maintain strong sales in the very market he started out in. Hahn preferred to maximize profits for the company elsewhere, as North American car customers of the 1980s increasingly selected Japanese and Korean cars over European mass-market imports. This shift in American tastes caused Fiat and Renault to quit the United States and Canada during the decade, and the ill-fated Yugo brand followed suit in 1991, making Volkswagen the last European car brand selling mass-market products in those two countries. In the 1990s, under Hahn's successor, Dr. Ferdinand Piëch, VW's North American sales would eventually recover.