Late 1960s, Porsche wanted to widen its line with a low-cost, entry-level sports car, but they didn’t have the capital and production capabilities to produce it. Volkswagen needed to up lift its image, but didn’t have the know-how and credibility to design it.
Heinz Nordhoff, then head of VW, and Ferry Porsche structured a partnership in which Porsche would design and develop a new sports car for VW that would use the VW Type 4 aircooled engine. The car was to be marketed as a Volkswagen, though the two men agreed verbally that Porsche could also market the car with an engine of their own.
What seemed like a good partnership went seriously awry when Heinz Nordhoff died in 1968, just as the project was coming to fruition.
Nordhoff’s successor, Kurt Lotz, found that the agreement was largely done by handshake, and Lotz had no intention of letting Porsche market the car under their own name as the deal had called for.
After considerable argument, an agreement was finally reached : In Europe, the car would be marketed by the combined marketing organization as the VW-Porsche 914; in the U.S., Porsche would give up the rights to market the cars on their own, and the new sports cars would be marketed through Volkswagen’s newly created Porsche+Audi division as the Porsche 914. .