Interesting news on the financial front.

http://www.autoweek.com/article/2009...NEWS/904239993

 

I always thought it was a bit strange for a relatively small company like Porsche to take over a relatively large company like VW. I know it has to do with personal goals of some individuals ( Piech, for one) but Porsche is now going to have to deal with the reality of the situation. My guess it that Porsche may begin to lose some control. From a financial perspective, the current setup involves the "tail wagging the dog" due to family politics and preserving a legacy.

 

Yes, Porsche has 10billion in debt because of their purchases of VW shares, yet now if VW shares start to decline, which I think they will, Porsche will be the victim of the same kind of squeeze they put on investors.

 

All the German car makers, and the Japanese and Korean top brands too, will come though this recession just fine.

GM and Chrysler will be wiped out. They cannot enter a legitimate bankruptcy - the only thing that could save them - so long as the current administration is defending the UAW at every turn. Wiped out stockholders, wiped out bondholders, taxpayers shoveling billions into them - and the UAW workers take 9 weeks off for the production furlough, but get half pay. It's insane.

GM is going to be what VW was in the 30s - essentially a state run automaker, mandated by the car czar to make the kinds of cars the government wants - in this case, "green" cars that no one wants to buy (not from GM at least).

Ford is all the US legitmately has left with respect to a car maker.

 

You forgot Toyota.....They are very much dependent upon the US and will, therefore, have significant problems. VW will do well because it is not so dependent upon the US as apposed to BMW and Porsche.

 

I do not think anyone in the auto industry is safe. Most european countries will be involved directly or indirectly in rescuing their beloved car industry....or just let them be eaten up by other industries. Funny to read on this site how Porsche was "brilliant" in making $4billion from VW stocks. Or how the Asian-Chinese market was going to save the european industry since those cars sell for twice as much (little do they know that most of that is on government taxes and not auto profits). Or the arrogance of Porsche telling us that they build one car less than they need to and tht all is fine. Well, well,....look at them now. There is no substitute for the american consumer. If we can't buy the goodies...neither can anyone else.
Hmmmm, I wonder when those Porsche made in China will be coming out?
God save our country..and our economy.
abe..IMHO

 

Well said.

 

The VW purchase strategy by Porsche is for the future. The current market problems don't change that need. Porsche needs to be part of a larger fleet to get its overall fleet MPG higher.

Its funny how the market acts as a big equalizer, with VW now benefitting from the disaster that VW North America created with their problems in the late 80's and early 90's that had VW all but disappear from the marketplace in much of the US.

Germany is protecting things too. They put up strict rules on what would happen with Opel (the German car make GM purchased back in the 20's?), in order to provide financial assistance.

 

Take it easy guys!
The rumored sale of shares is from Porsche AG to VAG. Both companies however, are controlled by Porsche Automobile Holdings SE.
Porsche SE (the holding company) has just obtained a new loan for Euro 10B that served to payoff the "old" loan that was used to purchase the VW shares. This new loan agreed at market conditions are two tranches of twelve month with the right of extending a tranche of Euro 6.7 billion for an additional year. Porsche intends to pay down the smaller tranche fast and aims for credit ratings the results of which should be available in may 2009. Thus the need for cash! By selling shares of Porsche AG to VAG Porsche SE is really transferring cash from cash rich VAG to cash hungry and debt ridden Porsche SE.
The credit framework contract for this new loan, allows Porsche to extend the volume to Euro 12.5 billion in the forthcoming weeks.

 

Oil money may flow into Porsche Automobil Holding SE.

 

Okay, but the end result would be that Porsche AG, the operating company that builds the cars, would be owned by a company, VAG, that is not wholly-owned, although controlled (but barely), by Porsche. .8% margin of control doesn't give me a lot of comfort.

 

...That is true if all the Porsche AG shares are sold to VAG.
This is not clear.
VAG could only be purchasing a "stake" in Porsche AG.

 

However, Porsche is targeting 75% ownership of VW, which is one reason they need some cash.