VW Pumps the Brakes On Porsche Going Public, Eyeballs Job Cuts
Back in February, there was some buzz that Volkswagen Group was seriously considering spinning off the Porsche brand or at the very least listing it on the stock exchange. While the rumors technically go back further than that, it wasn’t until early 2021 that outlets started citing anonymous sources claiming VW felt it had become too bloated with brands and wanted to shake loose some money whilst streamlining the organization.
Not so, says Volkswagen CEO Herbert Diess. It always seemed suspect that the manufacturer would offload what has consistently become one of its most profitable brands, though an IPO didn’t seem out of the question considering how ridiculously well it has worked for other entities underpinned by hype (valid or otherwise). Diess has indicated that neither scenario looks plausible anymore, stating that VW isn’t all that interested in surrendering any amount of control right now.
“We think we are well organized now in the premium sector, this is working for us quite well now,” the CEO said on a call with reporters to discuss Volkswagen Group’s third-quarter earnings. “We don’t sell any of the other assets currently.”
Bloomberg reported that Diess even noted the rampant speculation regarding Porsche in the media, stating that wasn’t indicative of reality while doubling down on his assertion that VW wants to keep premium nameplates. That presumably includes Audi, Bentley, and Lamborghini. But there’s no way of knowing what the future will hold as the economic situation seems highly fluid and Porsche remains exceptionally valuable with a valuation that’s estimated to be a few billion shy of VW’s own market capitalization.
From Bloomberg:
VW’s key stakeholders are meeting next month to review the German industrial giant’s rolling five-year investment plan that includes unprecedented expenses for new technology like electric and self-driving cars as well as an aggressive expansion of software operations.
VW Chief Financial Officer Arno Antlitz said he was “quite confident” the investments can be financed from the group’s own cash flow — so long as the company hits cost-savings targets.
VW is exploring options for a possible listing of Porsche, Bloomberg and other media reported in February. The maker of the 911 sports car is valued at as much as 99 billion euros ($115 billion), Bloomberg Intelligence estimates. That compares with VW’s current market capitalization of 122 billion euros.
But it’s not all sunshine and roses over in Germany. Despite VW reporting that it made 2.8 billion euros ($3.25 billion USD) in the last quarter, its current plan includes job cuts. Like many automakers, Volkswagen has reduced production output for 2021 on the grounds that the supply chains are an absolute mess and it needs to free up some capital so it can better transition to EVs. As it turns out, you can still turn a profit by building fewer cars by jacking up prices and reducing overhead wherever possible. But it’s not looking like a long-term solution for VW since its operating profits are technically down 12 percent vs last year.
[Image: Volkswagen Group]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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"VW wants to keep premium nameplates. That presumably includes Audi, Bentley, Bugatti, and Lamborghini." Nope. Bugatti is already gone. Sort-of. Bugatti was sold to Rimac. The "sort-of" is that Porsche, along with Hyundai, own part of Rimac. Jeez, don't you read your owner newsletters?
I'm getting weary of the "pumps the brakes" cliché. When you press down on the brake pedal, you’re signaling to your car that you need to slow down or stop. Pressing down on the brake pedal causes the brake fluid to head towards the calipers, which then engage with the brake pads. The brake pads apply pressure to the rotors, stopping your car. Pumping the brakes serves no function except to lengthen braking distance, upset vehicle stability, reduce control and annoy the driver following behind.