Wiedeking Porsche exit paves way for VW

July 23, 2009

GERMANY-PORSCHE/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.

    Wiedeking’s exit ultimately paves the way for Piech to
install his own lieutenant to run the sports car maker instead
of Wolfgang Porsche’s golden boy Wiedeking, who brought it back
from the brink of bankruptcy in 1992.

    But before that happens, the two companies still need to
agree on a structure which will allow them to make Porsche’s
sports car unit VW’s 10th brand. A merger between the two
companies rather than VW buying the Porsche sports car brand
from the Porsche family holding company is being touted as the
way forward. But although the various parts are gradually being
assembled, a deal could still be some way off.

    As to be expected in this family feud, mixed messages from
the Porsche and VW camps continue. The precise role of Qatar is
still unclear, some insiders are insisting Porsche can go it
alone with a financial boost from Qatar, while VW executives are
confidently predicting  that Porsche will be absorbed into the
larger company.

    Lower Saxony premier Christian Wulff says the German state
will retain its 20 percent stake in VW, with Qatar to take a 17
percent stake — this would roughly fit with the Qataris taking
Porsche’s VW options off its hands. But the crucial question of
how much the Porsche and Piech families would own of a combined
VW/Porsche has yet to be nailed down.

    VW Chief Executive Martin Winterkorn — Piech’s loyal
lieutenant — says a decision on Qatar taking a stake will be
taken on August 13 by the VW supervisory board. Presumably the
Qataris will want a better idea by then of who they will be
sharing the company with.

    Piech — grandson of Porsche founder and VW Beetle designer
Ferdinand Porsche — has made it clear that he wants control of
the Porsche marque and Wiedeking’s departure speaks volumes
about the balance of power between Piech and his cousin.

    Sacrificing Wiederking and bringing the Qataris on board may
not be enough to keep Wolfgang in the Stuttgart office once
occupied by Ferdinand Porsche. Piech clearly wants his name on
the door. Given his track record, you’d have to put your money
on him succeeding.


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