Jalopnik Precast: Porsche's Family Problem, Volvo Gets Less Sporty

Illustration for article titled Jalopnik Precast: Porsches Family Problem, Volvo Gets Less Sporty

On today's Jalopnik Precast, Spinelli and Farago wonder if Porsche's play for Volkswagen isn't vice versa and debate whether Volvo needs the R sport line, especially now that it's going away.


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It's worth remembering that Piech's (ironically pronounced pee-a-ch, as in chutzpah, btw) grandfather was Ferdinand Porsche, who designed the original Kraft-durch-Freude (KdF) Wagen, which was later re-christened the Beetle. After the war, old Ferdinand managed to hang on to his sideline in sports cars. However, Zuffenhausen almost went belly-up in the early 1990s. It has since managed to recover, thanks in no small part part to a private loan from the Porsche/Piech family.

Piech is a former CEO of VW and is now Chairman of the Board there - a position he controversially also holds at Porsche. Porsche CEO Wiedeking is putting a positive spin on it but, the real driving force behind the recent purchases of VW shares appears to have been Piech muscling back into Wolfsburg. Whatever the motivation, it is definitely Porsche that is buying VW and not the other way around.

In fact, Porsche is currently complying pro forma with a legal requirement to make a full takeover bid because it has crossed the threshold of 30% of VW's shares. Together with the shares held by the state of Lower Saxony, this now makes VW singularly unattractive to foreign hedge funds. Porsche is expected to gradually increase its stake in the future, but only when VW's share price comes down and the infamous "lex VW" is voided by the top EU competition court. A decision is expected later this year.

It remains to be seen if the Porsche brand will ultimately benefit from this ever-closer association with VW. Piech seems to think so and, it may be the only way for Porsche to keep selling its sports cars in Europe after the new rules on fleet average CO2 emissions come into force in 2012.

During his tenure as CEO of VW, Piech allowed - indeed encouraged - his alma mater Audi to chart its own course, precisely because it is the core VW brand that has long been the boat anchor on the enterprise. History suggests Piech will also let highly profitable Porsche continue to define its own product roadmap. If anything, expect directly competing product ideas from other parts of the Piech empire to be nixed.