Volkswagen And Porsche In A World Of Hurt
Why are Volkswagen and Porsche living together, but are not married? Because VW is worried about the outstanding lawsuits brought against Porsche by irate investors. Now suddenly Volkswagen lost that protection. Lawsuits are piling up right in front of Volkswagen’s own doorstep. At the court in Braunchweig, 20 miles away from Wolfsburg, billion dollar lawsuits are snowballing at an alarming rate.
An hour ago, Reuters reported that claims against Porsche and Volkswagen filed at the Braunschweig court have reached 1.8 billion euros ($2.3 billion).
A few minutes ago, the German finance wire BoerseGo reported that another €2 billion ($2.55) billion lawsuit was filed in Stuttgart, also against Porsche and Volkswagen. The German magazine Witschaftswoche says that in the meantime, there are more than 70 litigants.
Adding a just amended lawsuit for another €351 million ($448 million,) BoerseGo now reports that the lawsuits are standing at “approximately €4 billion” (approximately €5.1 billion.) That as of this morning.
To make the matter even more juicier, arbitration proceedings have been initiated against Christian Wulff, President of Germany. The President (a figurehead in Germany, the power is with the Chancellor) was Premier of Lower Saxony while it happened, and as such he sat on the Supervisory Board of Volkswagen. He is also being sued for €1.89 billion. Which he does not have.
Here is what Reuters says about the grounds for the pricey lawsuits:
“Massive demands for damages have been brought by enraged investors who took wrong-way bets on a decline in VW shares in 2008. They claim they were misled by the sportscar maker about how many shares in VW it held at the time, leading to a “short squeeze” that turbo-charged VW shares.
When Porsche revealed it controlled 74.1 percent of VW’s voting stock in October 2008, shares of Volkswagen topped 1,000 euros apiece, having more than quadrupled within just days.
Incredulous investors who had bet on an imminent end to the surge saw VW briefly become the world’s biggest company by market value.”
Lawsuits in the U.S. that followed a similar line of reasoning so far failed. Bringing suit in Germany is the right venue, but it can be much riskier and costlier. In Germany, those who bring suit, have to front hefty court costs. Those who lose, pay the whole court costs, plus the other side’s legal expenses. My calculator says that bringing a €4 million lawsuit can mean exposure of around half a million Euro. The calculator goes on strike at 4 billion.
Which may be €8 billion when the day ends. Someone is attaching big checks to legal papers.
Join the conversation
Latest Car ReviewsRead more
Latest Product ReviewsRead more
- Akear I just realized 80% of these EV vehicles producers are going to be liquidated within the next five years. It is not possible to survive by selling only 3000 vehicles a year. This reminds me of the dot.com bust of the late 90s and early 2000s. Those who don't learn from history repeat it.
- 3SpeedAutomatic I drove a rental Renegade a few years back. Felt the engine (TIgerShark) was ready was ready to pop out from under the hood. Very crude!! Sole purpose was CAFE offsets. Also drove a V6 Cherokee which was very nice and currently out of production. Should be able to scoop up one at a fair deal.🚗🚗🚗
- Inside Looking Out This is actually the answer to the question I asked not that long ago.
- Inside Looking Out Regarding "narrow windows" - the trend is that windows will eventually be replaced by big OLED screens displaying some exotic place or may even other planet.
- Robert I have had 4th gen 1996 model for many years and enjoy driving as much now as when I first purchased it - has 190 hp variant with just the right amount of power for most all driving situations!
frivolous lawsuits IMO