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VW Posts Solid Second Quarter Despite Net Profit Decline

Rival Peugeot slides deeper into a hole - yet investors cheer.

by on Jul.31, 2013

VW's net fell sharply - but that was largely due to its takeover of Porsche.

At first glance, it might have seemed a tough quarter for Volkswagen AG. After all, the maker’s net profit tumbled by half compared to year-ago levels. But the 2% jump in operating earnings is what analysts and investors are focusing on.

VW’s net was hammered largely by the anticipated, one-time costs associated with its takeover of German sports car manufacturer Porsche. The operating income, up 1.8% year-over-year, tells how the maker was able to hold its own in what it called a “difficult market environment.”

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In fact, an even clearer picture of that environment emerged from the earnings report posted by VW’s French rival PSA Peugeot Citroen which saw its losses climb to 426 million euros for the first half of the year due to declining European car sales and a strike by workers protesting its plans to close factories, reduce capacity and eliminate 8,000 jobs.

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Volkswagen Hunting for Elusive 13th Brand

No triskaidekaphobia for German maker.

by on Feb.08, 2013

VW Chairman Ferdinand Piech has an almost monomaniacal drive to add more brands.

Fiat/Chrysler CEO Sergio Marchionne may have put Alfa-Romeo out of the Volkswagen Group’s reach for now but there is a good reason to believe that VW is on the prowl for a 13th, and possibly even a 14th,brand to add to its large and varied stable of nameplates, according to industry observers.

While many manufacturers – notably General Motors and Ford – have been cutting back on their brand portfolios, Volkswagen AG Chairman Ferdinand Piech has been aggressively expanding the German maker’s marque count. VW last year finally completed the takeover of Porsche – brand number 12 — and Piech has continued to say he wants Alfa, despite Marchionne’s howls of protest.

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Piech has indicated Europe’s largest automaker plans to add at least one brand to the current lineup as part of a strategy to claim the global auto industry’s sales crown by 2018.

Piech said in an interview with German monthly magazine ADAC Motorwelt that his children 10 years from now will drive one of the automaker’s “at least 13 brands.”  VW representatives declined to comment.

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Enough is Enough for VW Labor Chief

Rejects idea of adding still more brands to portfolio.

by on Aug.22, 2012

The real battle for world dominance will be in China where VW is firmly entrenched.

Volkswagen AG already operates 12 different brands with the recent Porsche takeover.

Volkswagen’s voracious appetite for adding brands to its portfolio may finally have been sated – or, more precisely, the maker’s labor chief is saying “enough is enough.”

Having recently completed the takeover of German sports carmaker Porsche, Volkswagen reportedly was already moving on and looking at the possibility of acquiring the Malaysian-based Proton and its British subsidiary Lotus.  That could have brought VW’s brand count up to 14.

But Bernd Osterloh is putting his foot down over that idea, telling the German newspaper Handelsblatt, “We already have 12 brands and we first have to stabilize the group.”

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As the head of Volkswagen’s works council it might not seem like Osterloh’s opinion would matter.  It would only carry minimal weight with most companies around the world.  But under Teutonic rules, labor gets a very large say in the management of a manufacturer like VW, so his thumbs-down response on the Proton talks would be difficult to override.

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VW – Porsche Formally Say “I Do”

Unlikely merger now complete.

by on Aug.02, 2012

Now kissing cousins? Wolfgang Porsche, (l), and Ferdinand Piech bring two sides of the family together.

The on-again/off-again marriage of Volkswagen and Porsche has been completed, the two German makers saying, “I do” after resolving a list of legal problems that seemed likely, only months ago, to scuttle the proposed alliance.

The tie-up, which actually brings together long-feuding heirs of German automotive legend Ferdinand Porsche was the end result of an unlikely David-v-Goliath bid by the little sports carmaker to acquire its bigger rival.

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“The path is now finally clear for a bright future together,” said Martin Winterkorn, chief executive officer of Volkswagen and Porsche SE, in a prepared statement. “Even closer cooperation will enable us to significantly strengthen Volkswagen and Porsche, and further expand the Group’s product portfolio with fascinating new vehicles.”

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VW, Porsche Will Complete Merger After All

On-again/off-again tie-up to take effect in August.

by on Jul.05, 2012

Vanquished and victor - Porsche Chairman Ferdinand Porsche meets with VW Chairman Ferdinand Piech.

The on-again/off-again tie-up of Porsche and Volkswagen finally is set to be completed after a series of potentially costly snags that threatened to scuttle the deal.

The marriage – which follows an abortive David-and-Goliath effort by the smaller maker that triggered an assortment of lawsuits and a feud within the extended Porsche family – is “expected…to take effect as of August 1, 2012,” Volkswagen says.

Despite earlier fears that the tie-up could leave them vulnerable to billions of dollars in legal costs due to those lawsuits, the makers now contend the merger will generate a “clearly positive impact on consolidated profit(s).”

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“We will concentrate all our strength on the operative business and the solid, profitable growth of the company,” says Volkswagen CEO Martin Winterkorn, adding that the newly combined firm should achieve “long-term synergies of about €700 million per year.”

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VW/Porsche Merger Likely Dead, But Makers Still Expanding Ties

VW to start building Porsches later this year.

by on Mar.19, 2012

Porsche CEO Matthias Muller with the newly redesigned Boxster at the car's Geneva Motor Show debut.

The on-again/off-again Volkswagen-Porsche merger appears to have moved into the indefinite hold category, but that doesn’t mean the two German makers won’t expand their ties.  In fact, VW will begin producing the all-new Porsche Boxster, later this year, alongside the Golf Cabriolet.

With Porsche facing numerous lawsuits over its failed attempt to pull off the David v Goliath acquisition of larger VW, several years ago, the potential financial liabilities have all but scuttled a merger, Porsche officials suggested during a meeting with industry analysts.

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The meeting “confirmed our view that a merger of Porsche and VW is not possible,” said analyst Jochen Gehrke, of Deutsche Bank, though the smaller maker did confirm that it will continue expanding its relationship with its bigger rival.

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VW More Than Doubles Profits in 2011

Sales up nearly 15% as maker punches past Toyota.

by on Feb.24, 2012

Workers assemble a 2012 VW Passat at the maker's new assembly plant in Chattanooga.

If the latest numbers are any indication, Volkswagen is clearly on its way towards world domination.  The German maker is reporting that its profits more than doubled last year while global sales jumped 14.7%.

Volkswagen, no longer limited to the “people’s car,” but owning or partnering with a dozen different brands, has set out a goal of ending the decade as the world’s largest automotive manufacturer.  It didn’t quite get there in 2011, but with sales soaring to 7.2 million it punched by struggling Toyota, landing second only to revived U.S. giant General Motors.

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But shareholders and analysts are, for the moment, focusing on the earnings numbers, which totaled 15.41 billion Euros, or $20.5 billion, up from 6.84 billion Euros in 2010.  The latest figure is a full 1.5 billion Euros ahead of what analysts had been collectively forecasting – and triple what rival GM earned in a record year of its own.

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Porsche Facing More Legal Trouble

Further challenges to VW/Porsche merger.

by on Jan.03, 2012

The takeover attempt crafted by former Porsche CEO Wendelin Wiedeking now haunts the German maker.

A group of investment funds has filed a new lawsuit against Porsche Automobile Holding SE, seeking to recover approximately, $3.2 billion in losses suffered during Porsche’s failed fort to takeover Volkswagen AG in 2008.

The complaint, filed in district court in Stuttgart, alleges Porsche gained control over the price of VW common stock as it secretly built enormous derivative positions covering almost all of VW’s freely traded shares.

In the next step in the scheme, Porsche triggered a massive short squeeze, and finally released billions of Euros worth of shares for its own profit.

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The web site Investopia describes a short squeeze this way: “If a stock starts to rise rapidly, the trend may continue to escalate because the short sellers will likely want out. For example, say a stock rises 15% in one day, those with short positions may be forced to liquidate and cover their position by purchasing the stock. If enough short sellers buy back the stock, the price is pushed even higher.”

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Porsche Aims to Double Volume with New Models

Maker counting on emerging markets but sees more opportunities in U.S., Europe.

by on Nov.09, 2011

The planned Porsche Cajun will be one of a number of new models the maker is planning, company officials told TheDetroitBureau.com

Porsche intends to more than double its current global sales volume – while maintaining its position as the world’s most profitable carmaker – with the steady addition of new products.

The maker believes that much of its growth, going forward, will come from emerging markets like China, Russia and India, but it also believes there’s a significant opportunity to build demand in established markets such as the U.S. and Europe, company officials stressed during a California preview of the 2012 Porsche 911 Carrera S.  (For a review of the 7th-generation 911, Click Here.)

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“It is our objective to remain the world’s most profitable auto manufacturer,” said Porsche Board Member Wolfgang Hatz.

That doesn’t necessarily mean the German maker can keep up with a Toyota or Volkswagen – in terms of raw dollars – but on a percentage basis it is setting the benchmark, with a target of holding at a 15% Return on Sales, or ROS, and a Return on Investment, or ROI, of 21%.

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VW/Porsche Merger at Risk

German prosecutors expand investigation of sports car maker.

by on Feb.24, 2011

Former Porsche CEO Wendelin Wiedeking is one of several executives under prosectors' scrutiny.

The planned merger of Porsche with the bigger German automaker Volkswagen AG is likely to be delayed – and may be called off entirely – as the result of an intensifying investigation of actions taken by current and former Porsche executives.

German prosecutors are looking into possible market manipulation, breach of trust and credit fraud stemming from the abortive effort by Porsche to take over its bigger rival.  Among those under the microscope are former Porsche CEO Wendelin Wiedeking, the executive who triggered the attempted acquisition before being forced out when his company had to concede defeat.

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As part of a settlement, the debt-laden Porsche agreed to allow itself to instead be taken over by Volkswagen.  But that plan, Porsche officials today acknowledged, is now in jeopardy.

For their part, prosecutors in Stuttgart, home to Porsche, said three executives are facing accusations they provided “false or incomplete information” to banks involved in the planned takeover’s financing.

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