Porsche Loses Independence to VW: Launches Panamera Sedan.

Posted by: David Kiley on August 14, 2009

panamera.jpg

Volkswagen AG reached terms with Porsche SE to acquire a controlling stake in the iconic sports carmaker. The Persian Gulf State of Qatar is also part of the deal in a new VW-Porsche company, walking away with 10% of Porsche, as well as stock options Porsche holds in VW, with an eventual share in the company of 20%.

Volkswagen will pay about 3.3 billion euros, or $4.7 billion, for a 42-percent stake in Porsche’s automotive unit as part of a plan for the gradual merger of the two manufacturers.

The deal brings an end to Porsche’s long-held independence, which has for years been part of the image it boasted to investors and customers of the iconic brand. The chief guardian of that image, CEO Wendelin Wiedeking, agreed last month to step down from his post after 16 years. Wiedeking, the highest paid CEO in Western Europe, took the fall, following three years of trying to engineer a takeover of Volkswagen by Porsche through a derivative scheme that fell apart and left the company with more than $14 billion of debt to service.

Officials from both companies said the combined company would eventually overtake Toyota, the world’s biggest automaker, in sales and profitability.

“Volkswagen’s solid financial base and Porsche’s independence will be preserved,” VW’s statement said.

“That is what they are saying, but the fact is that Porsche is forever changed this week,” says Los Angeles-Based marketing consultant Dennis Keene. “It isn’t likely that Porsche fanatics will detect any loss of integrity in the vehicles, because the VW management and families controlling the company’s destiny are devoted to the brand, but the company is no longer independent.”

Poetsch said the exact capital position of the families in the new company would depend on specific criteria which would be reviewed during the process of the merger. Porsche AG is currently VW’s biggest shareholder with about 52 percent.

Porsche will become VW’s tenth brand in its portfolio, along with Audi, Bentley and Skoda. VW is also a major shareholder in two of the continent’s biggest truck makers: Scania AB of Sweden and MAN SE of Germany.

Shares of VW fell more than 15 percent on the news to euro191.72 while shares of Porsche Automobil Holding SE rose more than 10 percent to euro49.19 in Frankfurt afternoon trading.
Historic Week

Porsche is losing its independence the same week it is launching its newest, most controversial product in many years in its most important market. The Porsche Panamera, the company’s first sedan, has been unveiled at this week’s annual Concourse d’Elegance car show in Pebble Beach, Ca.

“This is the perfect stage to roll out this extraordinary car,” said Detlev von Platen, President and CEO, Porsche Cars North America. “Everywhere you look there is a spectacular California backdrop and the entire week is devoted to thousands of auto enthusiasts celebrating the beauty of classic automobiles, both new and old.”

The Panamera Gran Turismo will go on sale at the brand’s 202 U.S. dealers on October 17, 2009.

“First and foremost, the Panamera is a true Porsche,” said von Platen. “It is a race bred car that you can now share with three other people in incredible comfort and class.”

The Panamera has the engine in the front, like most sedans. Porsche is known for rear-mounted engines in its cars. It has been built on an all-new engineering platform, and is powered by a 400-horsepower 4.8-liter V8 in base models, a 500-hp version in the Panamera Turbo. The price range for the car is from $89,800 to more than $132,000.
The sedan was the brain-child of Wiedeking, though it is hard to say iof Volkswagen would have seen the value in developing a Porsche sedan given the fact that VW sells competititors to the Panamera from its Audi and Bentley showrooms.

Driving impressions of the car haven’t been logged yet by the leading auto testing magazines. But one criticism of the design so far is a bulbous back end roof-line, which were specifically designed to create a comfortable rear-seat space for full-sized adults.

Reader Comments

Karl

August 14, 2009 3:46 PM

Watch how the older air-cooled 911 Porsches become more valuable in the years to come. The 1984 to 1989 911's, with the 3.2 litre engines, will be collector's items someday soon. Go 911 GO!

ErwinKomenda

August 14, 2009 6:49 PM

I have mixed emotions at this moment - I am relieved that Porsche will not alone shoulder the burden of its massive debt load. However I mourn the loss of independence so critical to the company's identity and history. Ultimately the product is what matters ... I'll give Peich and the rest of VW the benefit of the doubt for now. I wish the management of VW and the teams in Zuffenhausen and Weissach the best of luck in this transition.

ad

August 14, 2009 7:17 PM

Yep, Porsche should have known better trying to swallow a company ten times its size. The ambition could have worked if Porsche had slowed a little and considered other uncertainty factors. Plus, Piech was a dangerous player. A company that's that powerful and commands the many respectable brands in its holding should be indication the type of person behind show. But it's much better now, reputation and financial stability, for the two companies that VW takes over than the other way around.

BT

August 15, 2009 12:37 AM

Admittedly, I am mostly a British car enthusiast, but I do appreciate a Porsche. This is a beautiful car. The bulbous back end roof-line will prove to be one of its finest design aesthetics. It is a Porsche, and not a Japanese or Korean also-ran with good mechanics and absolutely no distinction. I applaud Porsche for continuing to build vehicles that only look like Porsches. You shouldn't be punished for wanting to bring more than one person along...

Marcus

August 16, 2009 12:28 AM

Contrary to this story, the Panamera was first shown at the Shanghai Auto Show, not at Pebble Beach. Porsche knows the real money will be coming from China, not from America while it is broke.

Christian

August 16, 2009 8:15 AM

Porsche was never really independent. They have a long history of codeveloping their high volume cars with VW or VW's Audi group. They are just making it official now since consumers do not seem to care that the Cayenne is a VW just like a Lexus is a Toyota badly disguised. As far as the REAL Porsche vehicles - the 911 and the deceased Carrera GT - they will continue to be great cars... By the way, Lamborghini and Bentley are better than ever now that they are part of the VW group. The only caveat is that every now and then they share something (like the engine) with an Audi or VW.

Darrell Hitchens

August 16, 2009 10:39 AM

C'mon...a grocery-getter version of the 911?. Well-heeled moms across America can now get to the Piggly Wiggly in style and can also boast that they can now get there in half the time...

Mark

August 16, 2009 1:11 PM

Oh goody, now Porsche can have all the electrical problems and other nightmare problems that VW owners are used to.

porsche guy

August 17, 2009 12:49 AM

they have made a big mistake and sold their souls to the devil himself. You might as well have done a deal with Saddam Hussein. These qatari's are a racist and inhumane people and we can now expect porsche cars to be like hyundais. Other german car makers, beware the qataris, they will destroy your brand.

Carsanook!

August 20, 2009 2:27 AM

I am so ready to buy a Pamamera finally a Porsche family car.

Even mother-in-law will be happy no more Camry to Carrfour and Starbucks.
Arrive in style!

My only concern is who's gonna wash the Basalt Black Metallic Panamera. Atleast one a week - polish it,too.

Me? No way. Elsa, my Flippina maid maybe not. Khun Somsak my gardener cum bodyguard. Nope.

The drive-thru-24-hour-car-was beside McDonald's. They scratch the paint someone said. The fancy car wash at the high street department store. These guys smoke like chimneys.

So the best would be if Porsche could privide me with "free 'inclusive' as long as the warranty Porsche certified car wash"

Then I would buy new family car called Porsche. Pan-Amera!

John K. Lindgren
www.CarSanook.coma
Bangkok

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