Is this a European motor giant in the making, or a triumph of vanity over efficiency? Porsche yesterday signalled that it would take control of Volkswagen – within hours of the latter agreeing to buy out a third share in Scania held by Investor, the Swedish fund controlled by the Wallenberg family.

It looks like the long-expected consolidation of the European motor industry, the creation of a Northern European automotive colossus. You would like it to be a deal that finally could challenge the overweaning expansion of the Japanese motor juggernaut and present a technological challenge to the emergent Chinese motor industry. Best of all, it doesn’t look like the joining of Daimler and Chrysler, the last significant automotive merger, which brought debt, losses and misery to the German partner until the shrivelled American stub was shuffled off into private equity last year.

Yet we are told that it is not going to be a merger. Porsche and Volkswagen will remain distinct companies and, because of the bizarre German takeover rules, Porsche will not have to make a bid for the outstanding VW stock (it already made one last year, at a token low price, which was not taken up by outside shareholders).

This is a transaction that has little to do with costs and not much to do with cars, but everything to do with a family called Porsche, in particular to the scion of the family and major shareholder, Ferdinand Piech, who is also the chairman of Volkswagen’s supervisory board.

He is the grandson of Ferdinand Porsche, who invented the original “People’s Car” for Adolf Hitler, which much later went on a wildly successful world tour as the VW Beetle. This is about the ambition of Mr Piech to restore family control over Germany’s greatest corporate asset and it is the final move in a complex game of chess involving the state of Lower Saxony (home of Volkswagen), the German unions and the ambitions of nonfamily managers.

Lower Saxony has long held a stake of a fifth in VW and has opposed Mr Piech’s ambition, benefiting from legislation that prevented an investor from acquiring more than a fifth of the company’s stock. That law was declared illegal by the European Commission last year. However, the Porsche plans have come under further threat from Berlin with plans for a new federal law that would give a shareholder with a fifth of the votes the right to veto major decisions. This would give Lower Saxony carte blanche to prevent the Porsche clan from taking any initiatives (on jobs, for instance) that annoyed Lower Saxony.

In 2006, Mr Piech staged a management coup, ousting Bernd Pischetsrieder, the VW chief executive, who found himself alone, at odds with a major shareholder and the powerful IG Metall union. However, Mr Pischetstrieder’s unpopular cost-cuts have been hugely to the benefit of Porsche and its softly softly, catchee monkey strategy. A series of options on VW stock have delivered billions of euros of profits to Porsche, helping now to finance the cost of majority control of VW.

The question is what Mr Piech will do to challenge Toyota, the company that is now in his sights. Can he change these three idiosyncratic companies into the dull but efficient consumer products machine that is Toyota, the world’s biggest motor company, or will this be yet another vanity project in the long line of motor dreams?

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive