Luxury German carmaker Porsche says it is postponing moves to boost its stake in Volkswagen amidst signs the auto industry is facing tough times. But the delay doesn't mean Porsche's plans have been put on hold.
Porsche is still moving in on VW -- but more slowly than planned
At a news conference on Wednesday, Nov. 26, Porsche boss Wendelin Wiedeking said that the company would not reach its goal of acquiring a majority stake in VW this year, but that a future takeover was still on the cards.
"We're sticking to our plan of acquiring 50 percent [of VW shares] and trying to get 75 percent," Wiedeking said. "But with prices so high, it doesn't make sense since inflated prices would necessarily mean write-offs for us, if we went purchasing. And we're definitely not doing that."
In late October, rumors about Porsche's takeover bid caused VW shares to rocket to more than 1,000 euros ($1,292). VW stock prices have since settled to a more reasonable level of around 200 euros, but the securities remain expensive and, many analysts believe, overvalued.
In addition, even Porsche is feeling the effects of the global financial crisis and Germany's economic recession.
"It affects us all," Wiedeking said. "I mean we have a lot of investment bankers among our customers. When you hear about the mass lay-offs at investment banks, some of our customers are surely involved."
Sales, profits down
Production will be going into hibernation in December
Porsche estimated that its sales dropped by 18 percent in the August-November period. Revenues were also expected to decline by some 15 percent, down to 2 billion euros.
The luxury carmaker expects sales figures for the entire fiscal year of 2008-9 to be lower as well.
Many German carmakers are shutting down assembly lines completely during the Christmas holidays. Porsche's finance director, Holger Haerter, said the entire auto industry was facing hard times.
"A fundamentally healthy parts supplier could become a candidate for bankruptcy from one day to the next," Haerter said at the press conference.
Within the current economic climate, he said, an accelerated bid for VW stocks made no sense.
"We are not ready to buy VW shares at ridiculous prices," Haerter told reporters.