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O Canada! Snappy Dispatch On VW-Porsche Marriage From Our Neighbor To The North

Illustration for article titled O Canada! Snappy Dispatch On VW-Porsche Marriage From Our Neighbor To The North

Here's nice piece of car-business analysis, from north of the border. Volkswagen wants to take another crack at the North American market, and according to biz writer Eric Reguly of The Globe and Mail, VW might be able to pull it off, despite some major hurdles. However, when it comes to the larger goal of knocking Toyota off its perch...well, there are some problems.

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First and foremost, VW needs to take on North America and the Toyota hegemony in partnership with Porsche. And, according to Reguly, who cites German press reports, Porsche CEO Wendelin Wiedeking and VW chief Ferdinand Piech don't get along to well. As far as we can tell, Wiedeking is ticked off because VW has a deal that prevents the sort of cost-cutting measures that Porsche wants to implement at VW, as Porsche moves toward owning most of VW. Sounds like a potentially juicy automotive soap opera to us.

And props to Reguly for laying it all out so cleanly, with just a tantalizing hint of speculation. We're keepin' an eye on that guy.

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Dr. Piech used to be CEO of VW AG, later chairman of its board. He recently resigned from that post and now wants to become Chairman of Audi AG - his old haunt. Currently, Audi AG is still 100% owned by VW AG but there are persistent rumors that the Porsche Automobil Holding SE wants to restructure VW AG into several smaller parts that all report directly to it, just as Porsche AG does.

However, such a radical move would be subject to a possible veto by the state of Lower Saxony, which holds a 20.1% stake in VW AG. German law normally requires 25.1% for a blocking minority, but the EU court did not explicitly strike down this particular anomaly in the infamous Lex VW. The German justice minister is preparing an update to comply with the recent ruling, but the EU competition commissioner has already indicated she would file a second lawsuit if the revised law failed to raise the blocking majority at VW AG to the general standard. She would probably win but it could be years before a second verdict is handed down.

The background for all these legal skirmishes is that Dr. Wiedeking and the Porsche/Piech clan both want to clip the wings of the powerful but bolshy union leader Bernd Osterloh. His counterparts in Southern Germany are much more moderate.

Audi, Skoda, Bentley and Lamborghini are all highly profitable. Wiedeking thinks the core VW brand could do better. SEAT is losing money and so is Bugatti, though they are on track to at least break even before long. To clean house, the holding company wants to expose the rot. Osterloh and politicians alike fear that could ultimately lead to significant job losses in Northern Germany and Spain.