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Automobile industry

Porsche's Bid to Buy Stake in Volkswagen: Family Ties and Strategic Alliances

Strategic Insights

— 2 min read

Ferdinand Piech's grandson, Ferdinand Piech, is behind Porsche's attempt to buy a fifth of Volkswagen's voting rights. The move is seen as a strategic alliance between the two German carmakers, with Porsche looking to become VW's "partner of choice". The connection between the two companies goes beyond family ties, with Porsche having relied on VW for parts and manufacturing in the past.

Porsche officials are clear that buying a stake in VW will mean sharing more parts and processes with the company, potentially reducing costs. The partnership could be beneficial for both companies, with Porsche looking to cut development costs and VW seeking to improve its luxury brand image. However, there are also significant differences between the two companies, with Porsche being the world's most profitable carmaker but selling less than 100,000 vehicles a year.

Key Takeaways:

  • Porsche is seeking to buy a fifth of Volkswagen's voting rights, with Ferdinand Piech's grandson, Ferdinand Piech, being one of the largest shareholders in both companies.
  • The partnership between Porsche and VW dates back to the 1950s, when Porsche used VW parts and relied on VW's dealer network.
  • Porsche's Cayenne vehicle is manufactured by VW, based on the Touareg off-roader.
  • The companies will jointly develop petrol-electric hybrid motors for their SUV line-up and any other future models.
  • Analysts believe the partnership could lead to Porsche sharing more parts and processes with VW, potentially reducing costs.
  • Porsche's independence from outside shareholders makes it difficult to implement changes, but a partnership with VW could help.
  • VW, on the other hand, is struggling with high wage costs and labour relations issues, with 97% of workers being members of the IG Metall union.
  • The partnership may help VW with its labour problems, but it is unclear how Sustainable.

Statistics:

  • Porsche sells less than 100,000 vehicles a year.
  • VW sold 5.1m cars last year.
  • Porsche's estimated development costs for the Panamera model in 2009 are Euros 1bn.
  • VW developed the Bentley Continental GT for a fraction of the estimated development costs of the Panamera.
  • 97% of VW workers are members of the IG Metall union.
  • The government of Lower Saxony, the current largest shareholder with 18 per cent, has two board seats.

Sources:

  • Bankhaus Metzler (analyst Jurgen Pieper)
  • Reuters (report on Porsche's move to buy stake in VW)
  • Financial Times (article on the partnership between Porsche and VW)
  • VW (press release on its new compact SUV)
  • Porsche (press release on the Panamera model)

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