By on June 22, 2009

In the left corner: One of the world’s top heavyweights. European Champion. Number two in the world league. In the right corner: A flyweight contender. Ranks at the bottom of the list. The guy in the right corner wants to knock out the one in the left. He surprised him, scored some hits. Now the big guy on the left is starting to get going.

The guy on the left just won a very rare trophy: Volkswagen’s chief financial officer Hans Dieter Poetsch said to Reuters that Volkswagen will have a “positive result” in the second quarter. As for 2009, Poetsch added that VW is also on track to having a “positive result for the full year.” A car maker that turns a profit?

With most of the world’s auto industry seeing red, this is an unbelievable feat.

VW gains from a strong domestic market. In May, VW gained 60.2 percent in Germany. In all of Europe, VW gained 5.3 percent and increased its market share to an unassailable 21.7 percent. Next in line is PSA with just 13.3 percent, and they are losing. Volkswagen is strong in strong countries like China and Brazil.

Their dismal performance in the USA shields VW from the fallout: What you don’t have you cannot lose. Net liquidity in the first quarter was more than 10 billion Euros. VW is doing so well that they even volunteered to help the flyweight contender in the right corner to get back on his feet: If asked, VW would consider giving Porsche a loan, Poetsch hinted.

The guy in the right corner needs all the help he can get. German government bank KfW denied the application for a €1.75 billion loan, for the time being, Das Autohaus reports. The Sheikh of Qatar is rumored to want a stake of Porsche. But that stake is getting bigger. Instead of 25 percent, he now wants 29.5 percent.

Daimler is rumored to be sniffing around Zuffenhausen for a share of Porsche. Das Autohaus says that members of the Porsche supervisory board have their doubts about Daimler’s sincerity. After all, Daimler has its own problems. Porsche sits on a €9 billion debt.

Enter the heavyweight guy in the left corner. “If we give a loan, enough collateral needs to be there,” said Poetsch. The problem is that a lot of juicy collateral is already spoken for. The Porsche family had to put their crown jewels in hock. So what else is there? The loan offer sounds like a takeover attempt by another name.

Speaking of names, Bernd Osterloh, chief of the Volkswagen workers’ council, just called Wiedeking and Härter of Porsche “locusts.” Nothing a little Raid won’t solve.

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6 Comments on “Volkswagen v.v. Porsche: T.K.O.?...”


  • avatar
    John Horner

    Less than six months ago, Fortune magazine put out a puff piece on the genius of all things Porsche:

    http://money.cnn.com/2009/01/26/news/international/gumbel_porsche.fortune/index.htm

    Be very careful about believing anything you read in these corporate profile pieces in the press.

  • avatar
    rcolayco

    Wiedeking can rightfully claim to have saved Porsche from bankruptcy and further brought it to extraordinary profitability. But then his ego got the better of him. IF not for the Great Worldwide Financial Meltdown, his grand scheme to take over VW MIGHT have had a chance of succeeding. But as John Lennon once said, life is what happens while you plan other things.

    I happen to currently own several Porsches, but I’m strangely relieved that Wiedeking’s over-reaching ambition looks very likely to be thwarted. His decision to, among others, produce the Cayenne proved his keen marketing acumen. But in the end, he is NOT a car-guy. Piech is.

    With a fine blend of commitment to product development and business strategy, Piech has caused VW/Audi to emerge as a company that’s poised to keep going forward as others falter. His early commitment to the largest emerging markets has begun to pay off at the same time that his strong commitment to product development has helped carve market share out of his competitors’ hides.

    Wiedeking openly criticized Piech’s “wasteful adventures” such as the Bugatti Veyron, which is in fact a source of valuable engineerng design know-how as well as a “halo-product” for the rest of the company’s lines.

    I can’t even help but suspect that what Wiedeking had expected to do all along was to liquidate the mountain of debt he inevitably incurred in the course of his share-market maneuvering, with VW’s Euros 10 billion cash reserve. That’s an old trick first used by the American pioneers of corporate raiding way back in the 60’s.

  • avatar
    Lumbergh21

    I’m happy to see that Porsche’s move to become a financial institution that also produces cars (in a rather dirty underhanded manner at that) has failed, and now they are paying the price.

  • avatar

    rcolayco :

    The vision thing wasn’t Piech’s. Volkswagen do Brasil was founded 1953 (!!!!) under Nordhoff. Volkswagen China was founded 1983 under Carl Hahn. It wasn’t his initiative. A Chinese government delegation sprung a surprise visit on Volkswagen, looked at the available cars, the head guy pointed at the Santana, said “this one” and history was made. But Hahn was the driving force behind the China project.

    All other observations in your post, especially the cash raid, are 100% correct.

  • avatar
    rcolayco

    bertel schmitt:

    Thanks for correcting my erroneous attribution of the China & Brazil initiatives to Piech. Even as I wrote my comment, I had a sense that such was the case. However, I felt that a sort of “poetic license” might be forgiven if only because Piech does in a way deserve credit for successful execution on his predecessors’ initiatives.

    I must confess that recent news that the Weissach development facility is among the hardest hit in the company’s cost-reduction program, along with my general discomfort about Wiedeking’s recent conduct of the business, has cooled me off quite a bit on further purchases of Porsches. After having driven my friend’s Audi R8, I’ve decided the thing to replace my 996 Turbo will be the V10 R8, which looks to be at least as fast as the current Turbo but with the inherent superiority arising from its mid-engine configuration. Not to mention overall ride refinement.

  • avatar
    rcolayco

    john horner:

    Right you are. Business writers & motoring journalists are alike in at least one thing — they both sometimes write utter nonsense about subjects that they’re supposed to know well.

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