Iconic sports car maker Porsche, looking to take control of Europe's biggest auto group Volkswagen, is en route to creating a new industry global giant under a long-term strategy developed by Ferdinand Piech. In 1999, the then head of Volkswagen had forecast that in 20 years, there would only be four to six auto manufacturers left worldwide, and that VW would be number three. "I would also like to have Scania in our group," Piech had added. Since March 3, his vision has begun to take shape. VW, the biggest European car maker said it would take control of the Swedish heavy truck manufacturer, while Porsche took aim at the 20% of VW it still needs to control the car giant.
The new German heavyweight, created to battle global giants like Toyota, would have sales of around 140 billion euros (US$210 billion) and models that range from the VW Golf to the Porsche 911 and heavy trucks by Scania and MAN.
At 70 years old, Piech is the most powerful auto boss in Europe. He sits on the supervisory boards of Volkswagen and MAN, in addition to that of Porsche, in which he holds an undisclosed part of the capital. Piech is also the grandson of Ferdinand Porsche, founder of the eponymous group and the engineer who designed the Volkswagen Beetle for the Nazi regime. The two companies will finally be joined after more than 50 years, culminating a Germanic saga marked by history, powerful family dynasties and an incontestable industrial success.
"It's an intriguing story," said Ferdinand Dudenhoeffer, an auto researcher who knows many of the German bosses. He called the announced takeover an industrial project "carried by a family, for which tradition remains very important, and in its midst, an 'enfant terrible,' Ferdinand Piech." "But it is exactly as his dream is becoming reality that he lost his power," to the benefit of Porsche boss Wendelin Wiedeking, Dudenhoeffer noted.
Piech announced March 3 that he would leave the Porsche supervisory council, leaving his seat to brother Hans Michel. "All he said was: you'll understand why in a few weeks," a sector source said. Several experts say Piech is in open conflict with Wiedeking. Wiedeking has been left to defend the company against accusations from the IG Metall trade union that Porsche is acting like an investment fund. Wiedeking repeats that his project is industrial, aimed at forming a German group able to compete against fierce foreign competition.
At the same time, Porsche has used complex financial products to fill its coffers and fund the purchase of a group 15 times its size. And even though the current value of the 20% of Volkswagen needed by Porsche is around 10 billion euros, the Stuttgart-based company will not have to borrow a cent from banks. Two weeks ago, it opened a line of credit for the same sum at advantageous rates. "The final price will depend on what we pay directly and on VW share options that we hold" already, a Porsche spokesman said. Renewed automatically, they have already earned several billion euros for Porsche.
Copyright Agence France-Presse, 2008