Wunderbar! Porsche Loses Money!

Bertel Schmitt
by Bertel Schmitt

When Wendelin Wiedeking fought the battle against Porsche being taken over by Volkswagen and himself sent to Siberia, his last bullet was a threat that the takeover by Volkswagen could cost €3b in additional taxes.

BS, we said, “there are ways to circumvent this nasty detail.” The best way to avoid taxes are losses. Actually, losses will get you a hefty tax refund. We were sure that VW’s CFO Hans Dieter Poetsch would know how to come up with hefty losses. Poetsch did not disappoint.

Porsche, which formerly had more profits than sales is “headed for a second consecutive annual loss in the billions of euros as the hangover lingers from a failed takeover of Volkswagen AG,” writes Reuters.

Without going into bookkeeping arcana, Porsche will stay deeply in the reds until it has been completely taken over by Volkswagen. And that despite increased sales forecasted, and savings in the high hundreds of millions of Euros in this year and the next, due to synergies with Volkswagen.

One arcane detail is too pretty to not to be mentioned: If VW’s home state of Lower Saxony once again gets the right to appoint two members to VW’s supervisory board at the next annual meeting, Porsche will have to book its VW stake at market value.

“This would give rise to a considerable loss based on the current market price,” Poetsch said, and it would only be partially offset by the considerable deconsolidation gain from the sale of nearly half in Porsche AG. Wonderful book losses “in the low single-digit billion euro range!”

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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  • Iamwho2k Iamwho2k on Nov 25, 2009

    I don't like taxes, either, but if I'm Germany's taxing authority I immediately start an audit of Porsche and VW's books. Sounds like they are playing games here.

    • MBella MBella on Nov 25, 2009

      As long as the games they are playing are by the rules, there is nothing an audit can turn up. Plenty of companies here do the same thing.

  • Bertel Schmitt Bertel Schmitt on Nov 25, 2009

    I'm sure that these games are all legal, and tax efficiency is politically more palatable than subsidies ....

    • PeteMoran PeteMoran on Nov 25, 2009

      Amen to that. It's always preferable that companies participate in the tax system, unlike many that offshore the books to tax havens as well. So we should be thankful for that.

  • Mpresley Mpresley on Nov 26, 2009

    Losing money? People must not be ordering too many options, these days.

  • Johnny ro Johnny ro on Nov 26, 2009

    I imagine their tax dept is run like a profit center. Generate savings or you are out.