VW, Porsche, Qatar: Menage Trois Complete, May Be Number One This Year

Bertel Schmitt
by Bertel Schmitt
On Friday, the last act of the ménage à trois between Volkswagen, Porsche and the Sheik of Qatar was consumated. After the supervisory boards of Porsche and Volkswagen had given their approving nods to Porsche becoming the tenth brand of Volkswagen, Sheik Hamad bin Dschassim bin Dschaber al-Thani signed on the dotted line and bought 10 percent of coveted voting shares in Porsche SE for his sovereign wealth fund Qatar Holding LLC. Qatar will also take over “most” (says Das Autohaus) of the options on VW stock. They paid €1b for a package of derivatives that gives Qatar access to a 17 percent stake in Volkswagen. As peace breaks out between Wolfsburg and Zuffenhausen, Volkswagen is set to attack a big enemy: Toyota.When the amalgamation is finished in 2011, ownership in the new Volkswagen/Porsche conglomerate (which may be renamed to Auto Union AG) will be as follows:– Piech and Porsche families: 35 to 40 percent.– Lower Saxony: 20 percent– Qatar: 17 percent– Remainder: Widely held (or T.B.A.)After years of infighting; everybody wins:The Porsche/Piech families control the world’s second largest auto maker.Lower Saxony keeps its largest employer in Lower Saxony and can veto any decision.Qatar has bragging rights amongst fellow sheiks: They own a share of their favorite toymaker Porsche, and a good chunk of the currently most successful automaker on the planet.Wendelin Wiedeking walks away with a golden parachute of €50m. €25m of that will be (in a tax advantageous way) donated to a charitable trust, and, as a nod to the cabal that kept Wendy’s popularity high, €1.5m will be donated to organizations that support retired and impoverished journalists.The new Volkswagen/Porsche conglomerate has the right stuff to become the world’s largest automaker, said Volkswagen CEO Martin Winterkorn after announcing the successful consummation of the three-way nuptials. Lower Saxony’s premier Christian Wulff, who sits on the VW supervisory board and had a deft hand in Piech’s victory over upstart Wiedeking, sets the same goal. “It is our clear target to become the number one in the worldwide auto business,” Wulff declared to Germany’s Handelsblatt.A bad case of hyperbola? According to OICA, the world’s official scorekeeper of auto production, Toyota had made 9.2m units in 2008, VW only 6.4.This was 2008, this is now. In June 2009, ToMoCo’s year-to-date worldwide production was down 40.6 percent, whereas Volkswagen’s deliveries were down by only 5 percent. Volkswagen had little to lose in the USA, but is strong in the surging German, Chinese and Brazilian car markets. “Surpassing Toyota in terms of net profit and global production in 2009 suddenly looks like a strong possibility,” wrote Automotive News after looking at the astonishing numbers.Don’t judge VW by their skinny cover(age) of the USA. If current trends continue, Volkswagen may very well rule the world by the end of this year. As of June 2009, Volkswagen had already surpassed Toyota: Volkswagen’s year-to-date deliveries in June were 3.1m, whereas ToMoCo’s worldwide production stood at a little less than 3m.PS: That other German wedding, that of Opel, looks more and more like a severe case of DOA. Reuters says that a deal is not imminent and that “General Motors and the German government played down hopes on Friday of a quick decision on the sale.” This is so dead, it doesn’t even warrant a separate post on TTAC.
Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • ZoomZoom ZoomZoom on Aug 16, 2009

    Okay, that picture doesn't look like anything risque is going on. It just looks like some dead bodies carelessly stacked up... Here we go again?

  • Andrew van der Stock Andrew van der Stock on Aug 17, 2009

    VW is catering for the US market: Polo - you can't get it at any price, not even the truly pointless Polo sedan. This would be a great sub-compact car. I will most likely buy a Polo GTI in the next few months as it's a bit bigger and way faster than my old Golf III GL. New Beetle - designed in the US for the US market. Sells poorly in most markets. I loved my turbo New Beetle. Jetta - a rather pointless sedan. Outsells the Rabbit 4 to 1 in the USA. Sales are unheard of outside the NA market. Covers the compact sedan market segment. I am surprised they sell the Rabbit in the USA as the New Beetle outsells the Rabbit. I loved my Rabbit. Passat - sells well in the USA, not so well outside the US market. I am not sure it was designed solely for the US market considering its B platform underpinnings. This is a large car in Europe, but barely mid size in the USA. Tiguan - a small CUV recently on sale. I don't know enough about the sales history of this cute ute, but this segment is on fire in pretty much every market as folks abandon the mommy SUVs and soccer mom vans in droves. Tourareg - A CUV that no one asked for. Sells poorly everywhere but the USA. Covers the larger CUV segment. The 2.5 five cylinder engine is sold nearly nowhere else - it's a lumpen torque monster as most US folks like their grunt down low. Australia gets the much faster, much more economical TFSI super AND turbo charged (i.e. twin charged) 1.4 litre engine. Not only does the 1.4 get 15 kW more than the 2.5, it drinks about 2/3rd the fuel under all circumstances. But if you said to the average consumer, here's a 1.4 litre engine, they'd laugh and ask for a real engine whilst not realizing how awesome the 1.4 is. I doubt the US will see this wondrous little engine any time soon. More to the point, VW caters for the US market in little ways you take for granted. Not only do you have cup holders (!), but you have air con that works whilst the sun roof is open, both things that the German engineers apparently fought against (see "Getting the bugs out" for my source on this one). Andrew

  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.
  • GregLocock Car companies can only really sell cars that people who are new car buyers will pay a profitable price for. As it turns out fewer and fewer new car buyers want sedans. Large sedans can be nice to drive, certainly, but the number of new car buyers (the only ones that matter in this discussion) are prepared to sacrifice steering and handling for more obvious things like passenger and cargo space, or even some attempt at off roading. We know US new car buyers don't really care about handling because they fell for FWD in large cars.
  • Slavuta Why is everybody sweating? Like sedans? - go buy one. Better - 2. Let CRV/RAV rust on the dealer lot. I have 3 sedans on the driveway. My neighbor - 2. Neighbors on each of our other side - 8 SUVs.
  • Theflyersfan With sedans, especially, I wonder how many of those sales are to rental fleets. With the exception of the Civic and Accord, there are still rows of sedans mixed in with the RAV4s at every airport rental lot. I doubt the breakdown in sales is publicly published, so who knows... GM isn't out of the sedan business - Cadillac exists and I can't believe I'm typing this but they are actually decent - and I think they are making a huge mistake, especially if there's an extended oil price hike (cough...Iran...cough) and people want smaller and hybrids. But if one is only tied to the quarterly shareholder reports and not trends and the big picture, bad decisions like this get made.
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