VW, Porsche: Partners At Arms?

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In the five-year process of developing their new pair of upmarket SUVs, Porsche and Volkswagen formed an unusual sort of alliance-not quite a marriage, but far deeper than the typical joint venture.

The fruits of their labor, the Volkswagen Touareg and the Porsche Cayenne, finally saw the light of day at the recent Paris Motor Show, and will go on sale within the next few months. Unlike other joint vehicle development programs, the two sport-utility vehicles are decidedly different in appearance and, the automakers insist, in the way they handle and perform.

To achieve that differentiation, the two carmakers took pains to keep some parts of their individual development programs secret from one another. And there are signs that, as a result, the one-time partners have had a bit of a falling out.

"We had some hard discussions on the different philosophies of the two companies," right at the start of the program, which began back in 1997, recalls Matthias Kroll, the man in charge of VW’s side of the project.

In the process, the partners came up with a list of shared core assets-and who would be responsible for the development work on each of these. Porsche, for example, handled axle development while VW took the lead on transmissions.

But they also agreed on places where they would disagree, and how to engineer in such things as different handling characteristics that would distinguish the performance-oriented Cayenne from the more mainstream Touareg.

Developing two very different vehicles

"In the end, it was always kept clear there would be two very different vehicles," Kroll notes. So starting about two years ago, the partners began separating development work "to bring the separate character of each brand into the car."

2004 VW Touareg on hillFrom the point where the companies had their first running prototypes, for example, test drives were handled separately. Though critical elements of the suspension are shared between Touareg and Cayenne, settings and minor components, such as bushings, were left up to the individual automakers.

The partners even took a fundamentally different approach to the way power is distributed by the full-time all-wheel-drive system. Under normal conditions, the Touareg splits power 50/50 between the front and rear acles. Reflecting the way products such as the rear engine 911 sports car operates, Cayenne normally sends 32 percent of its torque to the front wheels, the rest to the rear. Even the climate control systems are programmed differently, though they use identical hardware.

Reaching into his pocket, Kroll pulls out what looks, at first, like a cigarette lighter. It is, in fact, a rechargeable flashlight that will be installed in the lighter sockets of all VW Touaregs. But not in the Cayenne.

There are other, more obvious differences. While Volkswagen will offer several different diesel options in the Touareg, , there will be none available for the Cayenne, according to Porsche CEO Wendelin Wiedeking. The type of performance a Porsche customers expects, he explains, "only comes from a gasoline engine."

Since so much work was done independently, the two partners have found some unexpected surprises since the two new SUVs were publicly unveiled. Porsche insiders, for one thing, say they weren’t expecting VW to take the Touareg so clearly up-market. It has, one Porsche executive concedes, a better interior than the Cayenne, and though publicly, the carmakers insist they are going after very different buyers, there could very well be some overlap.

Unexpected competition

"I’ve definitely got some competition," concedes Fred Schwab, president of Porsche Cars North America.

Behind the scenes, insiders report, the two companies have had sharp words, and the bitter taste this project has created could preclude further ventures between Porsche and Volkswagen-at least any time soon.

But as they go to market, the two companies will have something else in common. Neither has ever competed in the SUV market before, and it will take a serious marketing effort to convince consumers the new vehicles deserve some attention.

"Porsche is facing what might well be the biggest challenge we have ever seen in our history," contends Wiedeking, though he is quick to stress that the German carmaker is confident it will find plenty of buyers for the Cayenne.

Likewise at Volkswagen, which expects to move at least 65,000 Touaregs a year. Indeed, VW is already making plans to add more sport-utes to its line-up as it catches up on a market trend that almost left it behind.

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