Peter Schutz, CEO of Porsche AG from 1981-1987 and the man credited with saving the 911, died over the weekend at the age of 87. His death was first reported by German auto-enthusiast site GTSpirit, and confirmed by head of Porsche Classic Ray Shaffer. If you love Porsche, you owe Schutz a huge debt of gratitude.

Schutz was born in Berlin in 1930, but his Jewish family fled Nazi Germany soon after, settling in Illinois when he was 11. Schutz attended the Illinois Institute of Technology, then went on to work as an engineer for Caterpillar tractors for 15 years. He then worked for diesel engine builder Cummins, where he was VP for sales and service of US truck engines.

In 1978, Schutz moved to Germany to head up the engine manufacturing arm of Kloeckner-Humboldt-Deutz AG. Soon after, Ferry Porsche personally invited Schutz to apply to be the CEO of Porsche. He became the first American to run the company on January 1st, 1981.

Schutz was hired as CEO of Porsche during a trying time—the automaker's sales were in a slump, and Porsche lost money for the first time in 1980. In a 2013 story he wrote for Road & Track, Schutz noted that employee morale was extremely low when he took the job: Porsche had recently decided to cancel the 911, a car that executives viewed as outdated, expensive, and tricky to drive. Employees mourned the fate of the iconic car, but felt powerless to defend it.

RELATED STORY

How an American Saved the Porsche 911
"The decision didn't sit well with me," Schutz said. "While the car could be temperamental at times, at least it had character. That's what people loved most about it."

As CEO, Schutz would have none of this. He informed his staff that the 911 would live on in a move that's now part of Porsche folklore:

I went down to the office of our lead engineer, Professor Helmuth Bott, to discuss plans for our upcoming models. I noticed a chart hanging on his wall that depicted the ongoing development trends of our top three lines: 911, 928, and 944. With the latter options, the graph showed a steady rise in production for years to come. But for the 911, the line stopped in 1981. I grabbed a marker off Professor Bott's desk and extended the 911 line across the page, onto the wall, and out the door. When I came back, Bott stood there, grinning.

'Do we understand each other?' I asked. And with a nod, we did.

This decision paid off for Schutz and Porsche. Just a few years later, the New York Times reported that Porsche sold 49,365 cars and earned $54.7 million in 1985, compared with 27,983 cars sold and $4.5 million in 1981.

GTSpirt notes that Schutz was the force behind Porsche's 1980s Le Mans efforts as well. The automaker planned to run the 924 in the 24-hour classic, despite the car having no chance of winning outright. Schutz ordered that the company take its 1976 and 1977 Le-Mans-winning 936 out of the museum, fit it with an experimental engine being developed for the upcoming 956 prototype, and try for an outright victory.

With Jacky Icxk and Derek Bell at the wheel, the 936 won the 1981 race, setting the stage for Porsche's utter dominance of Le Mans for the next six years.

"They were winners and they were trying to act like losers,'' Schutz told the New York Times of the company he joined in 1981. ''We decided that technology is the heart of the company and that high performance is an approach to transportation. We were going to live or die with that concept.''

The Porsche 959
To bring technology to the fore and modernize to the 911, Schutz initiated the development of an ambitious sports car, the 959. With a race-derived twin-turbo flat-six, an all-wheel drive system with driver-selectable front-rear torque split, adjustable dampers and ride height, and a six-speed gearbox, the 959 was easily the most technologically advanced car of its time. And with a 199-mph top speed, it was the fastest production car in the world.

Unfortunately for Schutz and Porsche, the 959 was prohibitively expensive to develop, and the company lost an incredible amount of money on the project. Porsche estimated that the 959 would cost $300,000, and locked in that price with customers before production started. Porsche historian Karl Ludvigsen noted in Excellence Was Expected that each car ultimately cost Porsche around $720,000 to build.

That, combined with a weak dollar in the US, Porsche's largest market, effectively ended Schutz' tenure. According to the New York Times, his last day at Porsche was December 31st, 1987.

To this day, the 911 represents the heart and soul of Porsche. It's the car that defines the brand, even if sedans and SUVs pay Porsche's bills today. It's hard to imagine what Porsche would have become without Schutz's influence.

via Jalopnik

Porsche has announced that it is acquiring a 10 percent stake in Croatian supercar company Rimac, kicking off what the companies say will be a close collaboration.

Rimac may have became well-known on the heels of The Grand Tour’s Richard Hammond had a serious, life-threatening crash in the company’s Concept One Supercar, but the company has some seriously impressive electric ambitions.

Its C Two, unveiled in Geneva this year, produces around 2,000 horsepower and comes with 250 kilowatt fast charging to boot. Porsche, for its part, has been working towards becoming a leader in performance electric vehicles since it announced the Mission E years ago.

Now, we’re seeing a production version called the Taycan, a crossover-style concept called the Mission E Cross Turismo and of course this investment in Rimac. That, in addition to Porsche already making a range of plug-in hybrid performance cars, sets the company up well for an electrified future.

Rimac CEO Mate Rimac, for his part, said in the release that he sees this not just as a partnership with Porsche but as a segue towards a bigger business as a component supplier to OEMs:

While supercars are fun, being a core supplier to the entire industry is certainly a more compelling business proposition.

The Stuttgart Public Prosecutor's Office fined Porsche €535 million ($598.99 million U.S.) for neglecting its legal supervisory obligations in the vast diesel emissions cheating scandal known as Dieselgate, reports Automotive News. This fine concludes the prosecutors' Dieselgate-related proceedings against Porsche.

While Porsche never developed its own diesel engine, it used diesel engines developed by other entities in the Volkswagen Group. Prosecutors claim that Porsche's managers did not properly supervise the use of those engines in Porsche models, which include the Macan, Cayenne, and Panamera. This lack of supervisory control led to the sale of Porsche vehicles with diesel engines that did not comply with emissions regulations, which was the reason for Tuesday's meaty fine.

Porsche confirmed the fine notice in a statement, noting that it was for violations of "sections 30 (1), 130 (1) of the German Act on Regulatory Offence." The fine consists of €4 million for a negligent breach of duty by Porsche as well as a levy of economic benefits of €531 million. The amount of that levy is primarily based on the profitability of the company.

Both Volkswagen and Audi were previously fined €1 billion and €800 million respectively by prosecutors for similar proceedings. Prosecutors have also targeted individual engineers for their role in the scandal.

Dieselgate has cost the Volkswagen Group about €30 billion ($33.5 billion U.S.) in penalties and fines to date, Automotive News notes. It has been the largest business scandal in the company's history, with Volkswagen, Porsche, and Audi all selling diesel vehicles that skirted emissions rules.

Porsche announced in September 2018 that it would no longer offer diesel engines in any of its future cars. That announcement came three years after news of Volkswagen's emissions-cheating diesel scam was first disclosed by U.S. authorities.

In 1980, Porsche suffered its first financial loss since their 1931 beginning. That was just part of it's problems though including mismanagement and different departments not working effectively with one another. Additionally Porsche's two latest models, the 4 cylinder 924 (entry level model) and V8 928 (flagship model) were both front engine and water cooled and not well received by the Porsche loyalists who preferred the traditional rear engine air cooled Porsche. That most popular Porsche being the 911, the iconic sports car which had been designed by Butzi Porsche in the early 60's, grandson of the founder Ferdinand. The 911 was slated to end production in 1981 despite still having good sales which were falling for the 924 and 928.


Porsche of North America dealerships were also not happy with the German manufacturer, besides the 924/928 models, they were not happy with recent workmanship, quality, reliability and repeated warranty repairs. Founder Ferndinand Porsche's son Ferry was the major shareholder and chairman decided to look outside the company to replace the CEO.


Peter Schutz who was born in Germany in 1930 to a Jewish family whose father was a doctor, his family fled Germany in '39 and eventually got to the US via Cuba. He became a mechanical engineer grad from Illinois Tech and went to work for Caterpillar on bulldozer development eventually making it over to sales where his "people person" skills shined through for understanding what the end users wanted in their products. He went to Cummins Diesel eventually becoming head of sales with a somewhat unique and unusual approach. I.E. Schutz took occasional road trips with commercial diesel truck drivers to understand their work environment. In '78 recruited by KHD (German commercial diesel engine company) as a executive there, so he and his second wife Shelia made the move to Germany.


In the spring of '80, Schutz was contacted by a headhunter about a CEO position for an unknown auto company. Intrigued as he had no consumer auto experience he accepted the invitation, and told Porsche was interested in him. Ferry Porsche had heard of Schutz through his German connections being a solid exec. Peter was interviewed at Ferry's house with the other nine shareholders (Porsche was tightly owned by mostly family members in '80). The start of the interview didn't go well with Schutz on the defensive over questions from the others concerning Porsche's product heritage, history, technology. Ferry stopped them and explained the purpose of the new CEO was to fix Porsche's dis-functionality, there were plenty of smart engineers and technical management already there. They needed to work together which was not happening. Ferry asked Schutz what were Porsche's problems and how would he solve them.


This is where Schutz performed, he had done his research before the interview and read everything he could find on recent Porsche news, in addition his wife Sheila (a former marketing manager) made calls back to the US to find out about the Porsche scene and perception from dealerships and owner groups/clubs. He went over what he felt were the problems outside the internal working of the company and how he'd address them. Then how he'd discover how the company worked and didn't work on the inside, and then form corrective actions. He also candidly admitted that not only had he never driven a Porsche, he never even been in a Porsche. Somehow his interview won them and Peter Schutz became Porsche's second CEO Jan. 1, 1981.


All of this is alot of background needed for context I'd admit but now is where the tale gets fun and amusing to say the least. Schutz knew he was an outsider, heck even the German press and some Porsche workers referred to him as a "Gasterbeiter'' (a German word for "guest" worker with negative connotations) but that certainly didn't dissuade him in the least. He immediately started visiting every department he could and finding as much as he could about their respective operation and how it fit into the big overall Porsche organization. That's where his first important executive decision (a story many 911 owners know), Schutz in his own words.“You have to understand that, in Germany, once a decision is made, it’s made. As far as the company was concerned, the 911 was history. But I overturned the board’s decision in my third week on the job.

I remember the day quite well: I went down to the office of our lead engineer, Professor Helmuth Bott, to discuss plans for our upcoming model. I noticed a chart hanging on his wall that depicted the ongoing development trends of our top three lines: 911, 928, and 944. With the latter options, the graph showed a steady rise in production for years to come. But for the 911, the line stopped in 1981.

I grabbed a marker off Professor Bott’s desk and extended the 911 line across the page, onto the wall, and out the door. When I came back, Bott stood there, grinning.

‘Do we understand each other?’ I asked. And with a nod, we did.”


That was only the start of bold moves that Schutz would make at Porsche. Schutz had no experience or knowledge of Porsche's racing history so Ferry strongly encouraged him to go to the states in February to see the 24 hours of Daytona in Florida. There Sheila and Peter watched a Porsche customer team win with a 935 (911 derived race car), they got to see the enthusiasm from the teams as well as the Porsche fans at the race. In March Schutz was visiting the Porsche racing organization, he was inquiring about the team's upcoming races and efforts. The race team explained they were only racing in the lower 3rd tier class (924 turbo's revised for racing) for the '81 24 hours of LeMans. They were designing a new race car (956) but that would not be ready until '82 so they had no chance of winning the overall race.

Schutz told them “they were going to race with the intention of winning, or not going at all”. He ordered the engineers to quickly come up with something that could win overall. The next day the engineers presented a hastily drawn up plan to take the '77 LeMans winning 936 race cars from the Porsche museum and swap out engines for the unproven motor from a canceled Indy 500 race project. The Indy motor is still a turbo flat six but ran on methanol, and other detail differences. Although he knew nothing about Porsche's racing motors, he knew enough from engineering turbo diesel engine experience on how details made swapping different motors not trivial. Schutz ordered to remove the two 936 museum race cars and commence engineering/fabrication work on re-configuring them for the Indy motors which had to be converted to run on gasoline. He would drive down nightly after work to Weissach (racing division headquarters) for status, motivation and encouragement. In his words.

“In 61 days we couldn’t hire and train a bunch of new people, we couldn’t buy new tooling and machinery. No. In 61 days we couldn’t do anything but use what we had!
The racecar was being built out at Weissach, 4 or 5 kilometers away from the main plant. I would go out there after I finished my chores, maybe at six o’clock or so and people from the plant, from engineers to the financial department, they would jump in their cars and would drive to Weissach. They wanted to help. They were cleaning parts, sweeping the floor, running errands, making coffee, and at 11:00 o’clock at night I would have to say: ‘all right folks, tomorrow is another day!’ And they didn’t want to leave. They were all busy building this car.”

The 1981 24 Hours of LeMans was won by Porsche with a 4 year old race car that had been in a museum only 2 months before and adapted for a new unraced motor. Slight deviation here, this would not be the last time a retired race car would be brought out to win a major race. In 1987 Roger Penske took a three year old race car that had been on display in the lobby of the Sheraton Hotel in Reading, PA entered it with a new engine and a then unemployed Al Unser Sr. to win Al's 4th Indy 500.

He became more like the voice of reason and logic for some various technical problems along the way even though he hated micromanagement. A common 911 engine warranty problem was timing chain/tensioner failures, he inquired why the current design was being used that caused the failures and not redesign it to be more reliable. The response was the 911 was supposed to stop production at the end of '81, so why change it. A new tensioner was quickly developed.

Slowly but surely Schutz was winning over many employees and improving moral, his common approach was "have you thought about trying this or tried that" became common. To ensure staying on track, he moved out the accountants office across from his at Stuttgart and created a new office for his boss Ferry Porsche so he could quickly visit which would happen several times daily.

When Schutz arrived Porsche was at the start of development of the revised 924 to be known as the 944 with fender flares and new more powerful Porsche motor design. The new 4 cylinder engine was essentially 1/2 of V8 for the 928 model, and being large in displacement (2.5l) needed engine balance shafts to keep vibration down. When the motor development stalled Schutz wanted to know why. Engineering explained the initial design had 2 bearing balance shafts patented by Mitsubishi and were trying to get a 3 bearing balance shaft design to work with the same friction loss. They couldn't but thought Porsche's pride and prestige would look poor if resorted to Mitsubishi innovation, Schutz asked how much the patent royalty was and told about $17 per motor. Schutz's response was "What?!, you're wasting weeks of schedule to avoid shame and $17 per car". The engine design was revised back to the 2 bearing design and Mitsubishi got their royalty payments. To put a positive spin on this, Schutz retold this story at the 944 press introduction, he wanted to show Porsche would use the best solutions even when they didn't invent it.

This even extended to more visibly seen things such as a convertible 911, known as Cabriolet. Shelia Schutz kept inquiring why there were no convertibles in Porsche's product line and was told they already had Targa tops, convertibles were poor sellers, or chassis structural integrity is too much sacrifice for a Porsche. She wasn't the only one too as many Porsche marketing folks agreed with her but were overruled by the prior CEO the same one who cancelled the 911. Not anymore, by September of '81 a concept 911 Cabriolet was shown followed up a year later by the production car which sold ~4000 by `83. It was the first Porsche convertible since the mid-60's, and to this day Porsche has been making convertibles.

Porsche racing success continued into the 80's as the new 956 race car would go on to dominate LeMans winning six straight years from '82 to '87. And not just endurance racing, the McLaren racing team and it's sponsor TAG wanted Porsche to design and develop a racing engine for them to race in Formula One. They would pay for all the costs but the only catch was the engine would be branded "TAG" on the valve covers. Schutz was more than happy to do this as this paid for the Porsche engineers to learn about F1 racing as well advance their expertise in turbo racing engines and electronic engine management. In 1984 it's first full season the McLaren/TAG-Porsche car won 12 of 16 F1 races and Niki Lauda's 3rd F1 world driving championship. It would go on to win the F1 world drivers championships in 1985 and 1986 as well.

Schutz like others at Porsche knew how important racing was to their prestige and marketing, but also wanted the workers to be a part of the passion too. In '82, he approached the factory union chief with an offer like none he'd ever heard before. Porsche would take any assembly line worker for free to experience the 24 hours of Le Mans. So that year coach buses took several hundred factory workers set off ~500 mile trip each way to western France, many were foreigners ("Gasterbeiter") like Schutz to watch the Porsche Rothman's factory race team take 1-2-3 for their three 956's.

Like some other car companies, Porsche also did contract engineering work for other companies. They'd designed the VW Beetle, German military vehicles including tanks in WW2, and even a British military vehicle in the 70's. On this flight from the US to Germany, Schutz by chance met an Airbus executive in the cockpit. Schutz (a private pilot who once ran his own flight school) and the Airbus exec spent hours on that flight talking about cockpit ergonomics and automation.

The talk led to Porsche getting an engineering design contract to help redesign the Airbus A300 cockpit. But there's some more to the story, when Porsche built the first model of the new cockpit design, Schutz was disappointed in the comfort of the Airbus supplied cockpit seats. He had them swapped out with the 911's optional Recaro sport seats. He had the Airbus people try out 911 seat equipped cockpit and approved, Recaro who already made passenger seats for Airbus developed new cockpit seating as well.

By the mid 80's things were getting definitely better at Porsche, world car sales in '81 were ~28000 in '81 to ~53000 in '86. Even the front engine water cooled 944 and 928 models were improving in sales, and were helped by modernization (4 valve/cylinder, turbocharging,...). The early-mid '80's US booming economy also boosted sales so even alot of other factors came into play but Schutz was given credit by steering Porsche back to success. He was careful in interviews to attribute the success to everyone at Porsche.

However not all the ideas worked out, there were some big and small Schutz ideas that failed as well as not addressing some of Porsche's fundamental problems too.

Schutz had a vision for taking the potent and proven Porsche air cooled 911 flat 6 engine and using it for consumer aircraft. He convinced the board to fund an internal project to develop and certify the engine for the light aircraft market. After ~$75M investment there were only ~80 engines produced.

Perhaps his biggest vision was for a Porsche supercar, exuding the best technology and performance. Porsche was still seen as a lower tier than the Italian exotic car manufacturers like Ferrari and Lamborghini. Even BMW used the Italians to style and build the chassis/body of their M1 exotic car. The 930 (911 Turbo) had sorta done that in the late 70's, but now Bott (Porsche's chief engineer) presented to Schutz a revised concept of a modern Porsche supercar, it would look similar to a 911 but would be all new under-neigh, utilizing new technology (Kevlar/aluminum chassis, all wheel drive, electronics) that would evolve the company overall. Porsche up to this time, had traditionally sub-contracted most of their cars electronics such as German companies Bosch and VDO, now Porsche would take more electronic design and develop much more S/W for their cars. Schutz also wanted engineering to use more modern techniques to design/develop the car which included computers and digital data to measure performance. Prior they relied too much on test drivers "seat of the pants" feedback.

The end result was the 959, amazing technology and performance that's considered the most advanced car when introduced in '87. Computers controlling the engine, suspension, all wheel drive system, and very over-engineered. It could accelerate 0-60MPH in under 4 seconds and top out at 196MPH, while being easy to drive up to its limits unlike the 930. It also lost money, alot of money. Each 959 in '87 sold for ~$220k even Bill Gates bought one while it cost ~$520k to build. With only 292 sold for an overall ~$90M loss did not please the board.

However unlike the aviation venture, the 959 was a long term strategic success not only did it bring Porsche into the same level as the Italian it was sorta a R&D project as many of the area's developed fostered technology in use today at Porsche (all wheel drive and electronics/SW). Today 959 are beloved and sell for seven figures on the car auction market.

Porsche's archaic manufacturing and operations were area's Schutz wanted to change and modernize but the car model design and development problems had to be resolved first. That would not be solved until the mid/late 1990's three CEO's later.

Perhaps his biggest business failure was to change the importation North America sales arrangement with VW/Audi as the exclusive importer through ~300 Porsche/Audi dealerships. Schutz wanted to change it to a Porsche distribution model and change the profit margin from 16% to 8%. The Porsche Cars North America threatened to sue mother Porsche for $3b, even though the Porsche board had backed Schutz in this concept, they backed down after the legal actions were presented, Schutz felt betrayed by the board.

Then the final fall was the sudden US economic recession of 1987 which caused a sudden drop in US sales being #1 customer country. Add in the German Deutsche Mark exchange rate falling from 3.2DM (1985) to 1.9DM (1987) which resulted in more money problems. The board decided to end Schutz's 7 year contract early. It did not bother Schutz as he was disillusioned by the end of 1987 with his board relationship.

Schutz went back to the US, and became a speaker on the university circuit and wrote several books on leadership. The two following Porsche CEO's didn't even last Schutz's 6 years combined together. Porsche would falter until the mid 90's when the young Wendelin Wiedeking took over as CEO and instituted Toyota lean manufacturing techniques and hired ex-Toyota executives to institute a Toyota Production System (TPS) at Porsche to revitalize the company.

All the while, Schutz continued to give lectures on the executive talk circuit. He was greatly revered at Porsche owner gatherings in the states he'd occasionally attend. By the early 2000's many exec's and senior management knew Porsche had done Schutz wrong with his termination, some who were just starting their Porsche careers when the enthusiastic CEO would frequently visit their various departments with his hands-on approach. His pension was increased and invited to open the new assembly facility for Porsche's 1st SUV, the Cayenne. It was quite fitting as the Cayenne was like his "outside the box" thinking by listening to Porsche customers much as he had done 3 decades earlier.

Schutz passed away in 2017, it was noted on Porsche's website and many auto media around the globe but also Porsche enthusiast websites commemorated the former CEO who not only kept the 911 going but probably Porsche as well.

He goes on with his recount:

“A few days after I made the decision to go racing, the phone rang in my office, I picked up the receiver and a man’s voice said: ‘Mr. Schutz, my name is Jacky Ickx, I am a retired race car driver, (yea, right – he thought to himself - this guy is the leading long-distance sports car driver in the entire world) if the rumors I am hearing are true, I would like to once again drive a Porsche at Le Mans’. I told him, bring it on.

Shortly thereafter Derek Bell, Jochen Mass, Al Holbert, Hurley Haywood, Vern Schuppan, Hans Stuck, all the best drivers were calling me asking if they could come and drive those cars. If I had called any of these drivers and asked them to drive for Porsche the first thing they would have asked me is how much will you pay? But Porsche didn’t have any money, and they knew it.

Who the heck called these drivers and told them what was going on?

Well, it was quite a bit of work for me to find out who called all these people.

It was Heinz Metzger, one of my engine designers, who in another day, when he was young and beautiful, was in Jacky Ickx’ pit crew, when Jacky was a star in rising in Formula 1.

The other mechanics, all these ordinary people, got a hold of Heinz and told him: ‘Heinz you know this guy, why don’t you give him a call, tell him what we’re doing, if he comes and drives this car we can really win this thing’. That’s who called the super stars.

We went to that race in June of 1981, and of course, we won.

Back in 2009, then Porsche CEO Wendelin Wiedeking made a bold attempt to take over the VW Group that ultimately failed. He was then fired. Following that boardroom fiasco, VW assumed control of Porsche, while the Porsche and Piech families became extremely influential investors. They didn't want another outsider to attempt something like that again and instituted safeguards through a complex shareholder arrangement. It's worked just fine ever since but it might have to be unraveled in order to do something quite significant.

Automotive News Europe reports that the possibility of a Porsche IPO remains a very real possibility and it could be worth between $55 billion and $110 billion. To put that into some perspective, the VW Group as a whole has an estimated value of about $97 billion.

VW Group management is in no immediate hurry to list Porsche because the premium sports car brand continues to bring in lots of money that's needed to help fund its aggressive electrification strategy. The massive success of the Porsche Taycan proves buyers are willing to accept fully electrified Porsches. Other Group brands like Audi and the namesake Volkswagen are also seeing excellent initial EV sales. But listing Porsche could potentially bring in even more money for the automaker - if it secures a good deal.

The Piech and Porsche families will have to cooperate because they currently own more than half of the voting rights through their holding company, Porsche Automobil Holding SE. They also have a 31.4 percent equity stake in the VW Group.

Basically, the families need to be presented with a good deal that would compensate them for giving up control of Porsche once it becomes a publicly-traded company. One possibility reportedly being explored is a formula where the families would gain a direct and significant stake in the namesake VW brand at the expense of outside investors. They want some element of control without outside interference, just like they currently have with Porsche.

But why issue a Porsche IPO in the first place? Because the brand is extremely valuable by itself. Fiat Chrysler recognized the same situation with Ferrari several years ago. Today, the Italian supercar brand is valued at $52.5 billion, which is more than Honda ($46.9 billion) and Hyundai ($46.8 billion).