'Volkswagen Can Defeat Toyota,' Says Porsche Chairman

08 December 2006

STUTTGART: At an annual news conference in the southern German city on Wednesday, Wendelin Wiedeking, chairman of elite German sports carmaker Porsche, proclaimed his support and ambitions for the nation's backfiring auto giant Volkswagen.

Porsche, currently VW's largest shareholder with a 24.7% holding, is widely rumoured to be poised for a takeover bid which - given the close relationships between the controlling families of both companies - is unlikely to be hostile.

According to attendees at the Porsche meeting, Wiedeking's demeanour and tone implied that the maker of the coveted Caymen, Boxter and 911 sports models is already strapped into VW's driving seat.

Said he: "We believe that if anybody can stand up to Toyota, it is Volkswagen. There will be some changes. There have to be some changes, no doubt." However, Wiedeking declined to enlighten his audience as to the nature of these changes.

Porsche's investment, he said, entitled it to three or four seats on Volkswagen's supervisory board. Currently it has just two, but clearly intends to increase that number

"We could be passive board members or active board members," said Wiedeking. "Our intention is to be very, very active members of the supervisory board."

Last month, Porsche announced its intention to seek shareholder approval for the issue of up to 8.75 million new shares, which it could use to finance a major acquisition.

It declined to say whether this would be used to bid for the shares in VW it does not already own. But "what else they would do with all that money?" rhetorically asks Ferdinand Dudenhöffer, director of the Center for Automotive Research.

Wiedeking would not elaborate: "Like in a game of chess, we do not know the moves the other players intend to make," he said. "And to be taken seriously by all the other players, we need to have an appropriate level of approved capital."

Porsche's confidence is based on its track record as the planet's most profitable major carmaker. Its sales grew strongly again in the 2005-6 fiscal year.

But whether it has the breadth of vision and narrowness of purpose necessary to steer the Volkswagen juggernaut back onto the road to prosperity - let alone overtake Toyota - remains to be seen.

Data sourced from International Herald Tribune Online; additional content by WARC staff