[s-cars] Avant sold - looking for P-car

[Bill Mahoney]

Stefan et. al.
Based on today's news (see below,) looks like we'll all be driving P cars
soon.
Let the rebhadging begin and the resale values rise;)
Bill~P car liker, AlfaC8 lover~M

STUTTGART, Germany, Dec. 6 — For investors curious about Volkswagen, the
first stop these days should not be Wolfsburg, the north German city where
the auto giant is based, but Stuttgart, the southern metropolis that is home
to a smaller, elite maker of sports cars, Porsche.

Jochen Eckel/Bloomberg News
A Porsche worker finishing a Cayenne sport utility vehicle at the plant in
Leipzig. A Cayenne with a bigger engine is planned in February. 
German financial markets are rife with speculation that Porsche intends to
take over Volkswagen. It owns 27.4 percent of VW’s shares, making it the
largest investor, and it plans to buy more. At its annual news conference
here on Wednesday, Porsche acted as if it already called the shots.
“We believe that if anybody can stand up to Toyota, it is Volkswagen,” the
chairman and chief executive of Porsche, Wendelin Wiedeking, said at a
meeting that was supposed to be about the performance of his company. “There
will be some changes,” he added. “There have to be some changes, no doubt.”
A week after General Motors bid farewell to a change-minded big shareholder,
Kirk Kerkorian, Porsche served notice that it intended to tighten its grip
on Volkswagen. It will use its $5.3 billion stake to shake up Europe’s
biggest, though recently stalled, carmaker.
While Mr. Wiedeking declined to be specific about what changes he had in
mind, he said he expected to be involved in all aspects of Volkswagen’s
business. And he said Porsche’s investment entitled it to three or four
seats on the company’s supervisory board (it now has two).
“We could be passive board members or active board members,” Mr. Wiedeking
said in an interview later. “Our intention is to be very, very active
members of the supervisory board.”
In German business circles, Porsche’s creeping takeover has been seen as a
riveting drama. Mr. Wiedeking calls it a David-and-Goliath tale — somewhat
implausibly, given Volkswagen’s frailties.
Certainly, it brings together two starkly different brands, the utilitarian
“people’s car” and the rich man’s toy, that nevertheless share a common
history. Ferdinand Porsche, the patriarch of the sports car dynasty,
designed the Volkswagen Beetle for Hitler.
These days, there are other political and legal ramifications; Volkswagen is
protected from a full takeover by a German law that bars any investor from
holding more than 20 percent of the voting rights in the company.
Mr. Wiedeking said, though, that he expected a European court to strike down
the law. That would strengthen Porsche’s hand in relation to Volkswagen’s
other principal shareholder, the state of Lower Saxony, which owns roughly
20 percent of the shares and has the same voting rights as Porsche.
The European Court of Justice is scheduled to consider a challenge to the
law next Tuesday, and while it is not likely to act then, legal experts
expect a ruling within the next year.
If the law is struck down, analysts predict that Porsche will move quickly
to buy Volkswagen. Under German law, a company that owns more than 30
percent of another company’s shares must make an offer. Last month, Porsche
said it would ask its stockholders for authority to issue up to 8.75 million
new shares, which it could use to finance a major acquisition.
“Nobody knows what else they would do with all that money,” said Ferdinand
Dudenhöffer, the director of the Center for Automotive Research in
Gelsenkirchen.
Mr. Wiedeking said a takeover was not in Porsche’s current plans, but he did
not rule it out in the future.
“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.”
Mr. Wiedeking’s presentation Wednesday — including his comparison of
Volkswagen and Toyota — was typical of a man who is known as one of
Germany’s most confident chief executives. Porsche’s confidence comes from
being among the world’s most profitable carmakers. 
Its sales grew strongly again in the 2006 fiscal year, ended July 31,
powered by the perennially popular 911.
Pretax profit nearly doubled, to 2.1 billion euros ($2.8 billion), a result
of its newly added piece of Volkswagen’s profits, as well as profits from
stock-hedging transactions when it bought VW shares.
Yet there are signs that Porsche’s results may have reached a peak. The
company warned that revenue growth would slow in the next few years, as it
struggles with a fiercely competitive American market and a lack of new
models.
Porsche said its sales would not spike again until 2009, when it plans to
roll out the Panamera, a four-door sports coupe that will be its first new
model since the Cayenne sport utility vehicle in 2002.
But the Cayenne is also sputtering. Unit sales tumbled 29.2 percent in the
first four months of the new fiscal year, reflecting both its age and the
reduced appetite for S.U.V.’s in the United States.
Porsche is introducing an updated version in February, with a more powerful
engine, but analysts are unimpressed. “They have no concept about how to
salvage the Cayenne,” Mr. Dudenhöffer said. “They’re just doing a face-lift,
and putting in some more horsepower.”
The Cayenne is built in Volkswagen’s factory in Slovakia and shipped to a
Porsche plant in Leipzig to be fitted out. It is the main nuts-and-bolts
relationship between the companies.
Given all of Porsche’s challenges, analysts say it can ill afford the
distraction of taking over a much larger, much more troubled mass-market
manufacturer like Volkswagen. Even allowing the brands to become too closely
linked in the marketplace is a risk, they say.
What most concerns the analysts is a suspicion that Porsche’s interest in
Volkswagen is impelled by more than economic logic. Ferdinand K. Piëch, the
chairman of Volkswagen’s board, is regarded as the force behind a merger. As
the grandson of Ferdinand Porsche, analysts say, Mr. Piëch has personal
reasons to see the carmakers reunited.
“For me as manager,” Mr. Wiedeking said, “there were clear strategic reasons
to make this investment. I do think, however, that the Porsche and Piëch
families may have an emotional element in their thinking.”
“But both families care about the business case,” he added. “These are
business people, professional people.”