Volkswagen under Porsche: Cause and Effect

A court decision which struck down the so-called "VW Law" has all but opened the door for the luxury nameplate to finish its digestion of its German partner. Porsche already owns a substantial share of VW but not controlling interest. It has steadily been buying shares of VW for the last two years and has arranged for a $14 billion credit line to finish the job.

So what will the impact be? If Porsche takes the step towards ownership, one of the big winners will be Wendelin Wiedeking, chairman of Porsche (pictured).  It was Wiedeking who encouraged Porsche to invest in VW. Wiedeking, once a takeover is completed,  will decide on such things as what new models will be built by VW and make decision as to whether VW should open a factory in the United States.

The big loser could (would?) be Martin Winterkorn, chief executive officer of Volkswagen. Many of his pending decisions would be overruled by Wiedeking, a reflection of their current relationship. Winterkorn, for example, is said to favor opening a new plant in the United States but Wiedeking believes that VW must first increase its capacity in existing plants in Mexico. In addition, Winterkorn had favored the continuation of the VW Phaeton line while Wiedeking is said to be in favor of killing it. Both men agree, though, that VW needs to improve its presence in the U.S.

Finally, there are the Volkwagen workers. With the current status of VW, workers have had a substantial say in the decisions made by management. But that would change drastically if Porsche took majority control. Workers, as you can imagein, are not happy with the prospects.

More details can be found at the New York Times. Our take? We want the issue resolved once and for all so VW can finally get some products out again. Nothing destroys the auto industry than office politics.