Reuters blog archive
from Global Investing:
The world's largest car market, China, with a population of 1.3 billion people and an emerging middle class, holds great potential for investors and consumers alike with annual growth rates in the auto sector expected to hold at around 23 percent to 2017, according to Alliance Bernstein Asset Managers.
Joint ventures (JV), the most popular structure for foreign firms investing in the automobile sector in the world's largest car market, are set to capitalise on a growing consumer base in a country with 3.3 million kilometres of asphalt. Traversing the so-called 'mother' road 312 (China's route 66) is becoming more of an attainable dream for the Chinese consumer.
VW has a JV with Changchun-based FAW, Dongfeng with Nissan, GAC with Toyota and Honda. There are many investment opportunities, though a constantly changing sectoral environment and risks of mechanical recalls can cause sharp fluctuations as in any market, according to Bernstein Research, a subsidiary of Alliance Bernstein holdings.
China now has some 21,100 dealers nationwide, more than the United States (17,500), Germany (12,900), and the UK (4,700) in absolute numbers. Domestic dealers are overshadowed by international brands in the larger cities. The next step is for the international JV-backed dealers to make regional expansion where domestic dealers are currently concentrated.
Volkswagen's merger with Porsche has exposed a bizzare quirk in the Deutsche Boerse's index requirements, which could allow the carmaker's preference shares to replace its ordinaries in the flagship DAX equity index.
Preference shares have no place in blue-chip equity indices. Their dividends must be paid before any distribution to ordinary shareholders, but they have no right to anything further, often lack voting rights, and escape most of the disclosure requirements imposed on ordinary shareholders.
Cries from Volkswagen about pulling its business from Magna if the Canadian car parts maker ended up owning a stake in GM's former European unit Opel ring somewhat hollow given the success Magna has had in juggling its customers' different needs so far.
Even so, Magna is trying hard to keep its customers -- which also include Toyota, Ford and BMW -- happy by vowing to ringfence Opel from the rest of its business now it has won the long battle to buy GM's former European unit.
from Funds Hub:
Figures from Data Explorers today show hedge funds have again been largely right in their short positions, this time in Cadbury.
The Porsche and Piech families -- the descendents of Ferdinand Porsche --are selling a 10 percent voting stake in the Porsche holding company to Qatar in order to get them out of the financial mess they found themselves in when Porsche tried an audacious takeover of Volkswagen.
A Reuters report says that details of a deal between Volkswagen and Porsche have been broadly agreed, with VW set to buy a stake of up to 49 percent in the sportscar maker. The Porsche marque will then enter into a new "Auto Union" as the 10th brand, under the leadership of VW CEO Martin Winterkorn.
Porsche's chief executive Wendelin Wiedeking may have been persuaded to leave in order to ease a merger with Volkswagen, but there are still major hurdles to overcome before the sports car maker finally emerges from the pits.
Wiedeking is paying the price for his disastrous plan to take over the far larger carmaker, which left Porsche with a majority stake in VW but saddled with debts of 10 billion euros ($14 billion). His departure marks a crucial turning point in a bitter power struggle between VW Chairman Ferdinand Piech and his cousin Wolfgang Porsche, chairman of the family firm.
Porsche may own a lot of options on Volkswagen - around 20 percent of the larger carmaker's shares - but the sports car maker is running out of alternatives to solve the financing problems it built up by acquiring a 51 percent stake in VW.
from The Great Debate UK:
Porsche and Volkswagen gave themselves four weeks to come up with a blueprint for "an integrated car manufacturing group".
Their time is up. The carmakers made their statement on May 6, but investors are still in the dark. In the meantime, VW shares have staged the kind of yo-yo performance more normally associated with a highly leveraged hedge fund.
from The Great Debate UK:
Ferdinand Piech needs to decide whether he 's driving a Porsche Cayenne or a VW Touareg. The Volkswagen chairman and part owner of Porsche cannot continue to drive both. He should step down as chairman and hand VW CEO Martin Winterkorn the wheel to negotiate any merger talks between the two carmakers.
Piech's shareholding in the Porsche holding company leaves him hopelessly conflicted. However hard he tries to balance his responsibilities, Piech is always going to be left open to accusations of double dealing and almost certainly to legal challenges by minority shareholders should a deal be struck.