Porsche: Creating the Plot to Takeover Volkswagen?

Porsche is known for producing small but immensely powerful engines. The same can be said about the company---small but powerful. Porsche is a German automaker renowned for its lines of sports car. News has it that the German sports car maker is getting closer to its goal which is to control Europe’s largest automaker, the Volkswagen Group. It should be noted that Porsche is one of the largest shareholders of Volkswagen with a total of 27.4% and is planning to further increase its stakes if not for the Volkswagen Law.

The Volkswagen Law limits the voting rights of shareholders in the company to 20% regardless of how large their owned shares are. Another provision on the VW law also gives the right to the State of Lower Saxony to appoint directors regardless of the fact that they are not the largest shareholder of the company. The VW Law is nothing but unfair to Porsche. This is also the very reason why Porsche would like the VW Law to be abolished.

The Volkswagen Law was ratified in 1960 during the time of privatization following the postwar. During that time Volkswagen was rescued by the allied and German authorities. The VW Law was created to protect the company from any form of takeover.

But currently the European Court of Justice has begun to criticize the VW Law stating that the law hinders the flow of free capital which increases the possibility for it being cancelled. Furthermore it is also expected that if ever the law is repealed the State of Lower Saxony might sell some or its entire 20.8% stakes in Volkswagen and the probable buyer is none other than Porsche.

Wedelin Weideking, Porsche boss has expressed his desire to increase the company’s stake in Volkswagen to 8.6 billion Euros or $11.2bn. But why does Porsche has such care for Volkswagen? Even before, Porsche has already have had a big influence at Volkswagen brought by the fact that part of Volkswagen takes its root from Ferdinand Piech, who is a member of the Porsche family. Piech was also the former CEO of Volkswagen and now hold the chair of the upper supervisory board. And recently, in the most cunning display of power and influence, Piech and Wiedeking have conspired to oust Bernd Pischetsrieder who is the former boss of BMW and VW CEO. He was replaced by Martin Winterkorn who is a protégé of Piech.

Piech has also previously worked at Porsche where he was responsible for the launching of the 917 racer. Afterwards he went to Audi and started the Quattro revolution. When finally became the CEO of VW he foster quality turnaround which helps VW and Audi to obtain a place in the premium car segment. He also introduced a platform strategy to control costs.

There is a strong partnership between Porsche and Volkswagen not only because of family but also of interest. Porsche wants to increase its stakes in Volkswagen to protect its investment and also to make sure that its ongoing cooperative efforts with Europe’s largest automaker will not be jeopardized. At present, the German sports car maker is sharing production facilities with Volkswagen. Europe’s largest is also the supplier of quality parts to Porsche like Volkswagen pressure plate and others that are used to build cars.

Some of the vehicles produced by Porsche in partnership with Volkswagen are Cayenne and Touareg SUVs. The upcoming Panamera sports sedan will have its body built at the VW’s Hanover plant and will use VW Audi electronic bus systems plus other parts such as safety electronics, infotainment, security and climate detecting gadgets.

But according to some reports the interest of Porsche to Volkswagen goes beyond pure business interest - some say that Wiedeking thinks that he can do a much better job than any of the bosses in VW. The ousting of Pischetsrieder is seen by many as a means of slowly taking control of Volkswagen. It is not going to be surprising if one day Porsche will really take over Volkswagen.