Porsche AG has increased its stake in Volkswagen (VW) to 50.8%. Porsche plans to increase that to 75% this year, but does not yet control Volkswagen management. If Porsche fulfills its intentions to increase more than 75%, the law of contracts of domination will take effect and it would obtain the total financial control of Volkswagen.
If you are just reading about the union figures, these two German companies have had a long history together. The chairman of VW’s supervisory board is Ferdinand Piech. He is the grandson of Ferdinand Porsche, founder of Porsche AG. As Ferdinand rose through the ranks of Audi and VW, he became famous for his Volkswagen Beetle design.
Porsche’s acquisition of VW is almost a done deal. Porsche has been on this mission for more than two years and its final figures show that it is an excellent move. In Porsche’s final year of annual reporting, it made an operating profit of € 1 billion from car sales, but the company’s net income was € 6.39 thanks to the increase in the value of VW shares.
Although the recession has affected car sales, VW still managed to increase its market share. It now has 2.8% of the US market, which includes sales of its Audi brand. Both VW and Audi saw sales declines in 2008, but they were less than most other car companies. VW fell 3.2% while the total decline in the auto market was 18%.
Although the recession has affected car sales, VW still managed to increase its market share. It now has 2.8% of the US market, which includes sales of its Audi brand. Both VW and Audi had declining sales in 2008, but they were smaller than most other auto companies. VW fell 3.2% while the overall auto market decline was 18%. VW is enjoying a resurgence in popularity, thanks to the return of passenger cars. Passenger cars outsold SUVs for the first time since 2000 last year. VW is expanding its manufacturing presence in the US and has plans for a great future.
Porsche’s takeover of VW seems like a natural move, although you might think it should be the other way around. VW sells around five million cars a year and Porsche only sells 100,000. Whatever the numbers, Porsche’s takeover of VW is a great strategy for these two big German companies. With the auto industry going through a major transition, the merger will help them financially, organizationally, and in product development. Rather, the biggest winner from this acquisition will be the consumer.