By on November 21, 2009

Karmann can breathe again. Picture courtesy

Nine months ago, German Karmann declared bankruptcy. The maker of the venerable Ghia, and until recently contract manufacturer and specialist for ragtops, fell victim to the sad fact that Fahrvergnügen doesn’t agree with carmageddon.

Now, Volkswagen, one of Karmann’s main customers, picked up the core pieces of the maker. Volkswagen isn’t taking over Karmann (that would mean assuming the liabilities.) Volkswagen is buying assets: Plants, machinery, real estate. Production in Osnabrück will go on. At a much smaller scale than before.

The deal is seen as a “Thank you” note by Volkswagen for Christian Wulff, Premier of Lower Saxony, member of the Volkswagen supervisory board, and master of the 20 percent of Volkswagen stock. It was Wulff who assisted Piech in turning the table on upstart Wiedeking. Instead of Volkswagen being taken over by Porsche, Porsche was taken over by Volkswagen. Wulff’s hometown is Osnabrück. A day after the Volkswagen board officially approved the merger with Porsche, “Wulff received the Karmann-rescue he had wanted,” writes the Wirtschaftswoche.

It was a cheap gift. VW is thought to pay €30m for the assets, a mere flyspeck on VW’s €26b investment program for the next three years. Volkswagen will launch a new subsidiary for Karmann and will resume production in 2011. It plans to employ 1000 people in 2014, maybe, way down from the former 7000 who in a former time had built ragtops for richies.

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23 Comments on “Karmann Lives, Kindof...”

  • avatar

    Hola Bertel, Some questions immediately come to mind and I’d be pleased if you would share your thoughts: 1.) Fiduciary responsibility: Does this 30M € “schnäppchen” represent some kind of gift to VW, or the highest realistic bid for the assets? I.e. doesn’t the insolvency administrator’s job getting the best return for the secured creditors?  2.) In my eyes, the Karmann name still has a good brand value, i.e. a certain “custom coachbuilder’s cachet”, and can’t the administrator sell this to VW exclusive of current-related liabilities? 3.) EU-approval: If VW was able to grab these assets below market value, wouldn’t the EU view this as illegal state subvention?  4.) Seems this purchase would give VW leverage visavis Magna’s attempts to return to the VW fold (I wonder what kind of indemnification Sparbank gave to Magna for potential damage to its customer relationships ((VW writ large)) arising from the Opel misadventure…)  Gruss aus Barcelona.

    • 0 avatar

      (edit function doesn’t seem to be working … comments never quite load after edit window opens.)  

      btw, I think this is an interesting parallel to what is happening with Fiat & Bertone … after Fiat’s acquisition of certain assets of Bertone, Magna-Steyer seems to be the odd-man-out w.r.t. production of euro-market Chrysler vehicles.

    • 0 avatar
      John Horner

      When has the EU ever stopped Germany from doing as it likes?

  • avatar

    @Robert Walter. Most logically, VW’s bids should be substantially higher than others. The point is, they paid extra, when they really didn’t have to. If  they hadn’t, nobody else would have laid bids that high. So, they would have been forced to accept the offer in any case. Or so I assume…

    On the edit function, it seems to work by saving, close window, refresh. Sometimes you have to go all the way to the first page again, but the post is surely edited and updated.

  • avatar

    The edit function functions in Internet Explorer, but doesn’t in Firefox. Has been reported.

  • avatar

    As for the Schnäppchen (bargain-basement price): The owners wanted €60m, VW didn’t want to pay more than half. Apparently, there was  no other bidder. Car factories are not hot properties these days.  No final numbers have been disclosed. The EU angle is a reach.  Car companies may buy other car companies as they see fit.

    • 0 avatar

      Thanks for the feedback.  Hadn’t seen the owner’s valuation, so wasn’t sure if 30Me was good, or low-ball, or a political price.  I agree buyers/sellers have freedom to do deals (subject to EU review for competition/cartel issues ((before approving it, the EU asked customers and competitors to weigh-in on Delphi’s divestiture of its European steering ops.))) and I was not sure, to what extent, this applied to VW’s Karmann deal.

      On the political/communication front (depending on what parts of the assets VW acquired and how they utilize them), this is a value-deal considering the potential savings to be extracted from Magna and Valmet.

  • avatar

    The question I wonder about is what will VW build there?  2011 is not far away, so it has to be a model well along in development.  But 1000 people means a low-volume boutique model, even when assisted by automation.
    Next-gen Beetle convertible?  Bluesport?  Something else?

  • avatar

    Well there has been talk (even on TTAC) about a possible VW roadster the size of a Miata.  Sounds like a good place to build it.

  • avatar

    Usually, outside coachbuilders are used when there’s a really low-volume car in the pipeline, that would otherwise only interrupt the production. So, does VW have a low-volume car up its sleeve? Think of 1000-5000 units a year.

  • avatar

    call me when my ’11 Karmann Ghia with Automatic Stickshift is ready.

  • avatar

    Karmann happened to make the absolutely highest quality convertable top of the time. It even kept most of the rain out.

    • 0 avatar

      That may be true, but no one could match the number of snaps (half of them not working) on the top of my old MG Midge.  Besides, what’s a little water between friends across the Channel?  So take that Mr. Karmann…geesh, these Germans are always trying to take over something.  Next thing you’ll be telling me they’re trying to take over the world!

  • avatar
    Gardiner Westbound

    Glad to hear Karmann will survive, albeit in different corporate form. They have made some very nice, reasonably priced cars over the years. The Karmann bodies were usually superior to the VW oily bits.

  • avatar

    I remember my dear aunt (almost 6 feet tall) driving around in her orange Karmann Ghia in the early/mid 70’s.  What a sight…

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