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Historic German tie-up beckons

2009-07-21 10:52

Lenaig Bredoux

The top boards at Porsche and Volkswagen are to meet separately on Thursday in a bid to replace acrimony with a historic alliance.

At the meetings, offers based on two industrial strategies and backed by the two clans will go head-to-head. Investment by Qatar is a central issue, and in the background rumours of key resignations swirl.

VW will be first off the line, starting its special meeting of the supervisory board at 1000 GMT at Stuttgart airport, southwestern Germany, with Porsche following four hours later at its headquarters in Stuttgart.

The agendas cover the futures of the two groups, which have been closely linked since January when Porsche acquired almost 51% of the shares in VW, the biggest auto maker in Europe.

Porsche, burdened with about 10 billion euros (14 billion dollars) in debt, had to abandon in May a plan to take full control of VW and its big cash pile, and must now find other sources of financing.

"We will know the solution on Thursday," the regional premier of Lower Saxony, Christian Wulff, forecast last week.

The northern German state is home to VW and owns 20% of its equity.

VW declined to comment when contacted by AFP, but both companies remain prudent with respect to what might emerge from the meetings.

"We will see at the last minute," an industrial source said.

A Porsche spokesman added: "We do not know what the family will decide. We are going with the idea that there could be a decision. But we cannot expect one."


All of Porsche's voting rights are owned by the Porsche and Piech families.

The spokesman also noted that Porsche had a regularly scheduled meeting of the board one week later.

The two meetings could be a landmark for the German auto industry.

On one side, Porsche boss Wendelin Wiedeking is pushing for Qatar to buy a stake in the company along with VW stock options owned by Porsche, allowing the maker of the 911 sports car to retain its independence.

On the other, the head of VW's supervisory board and major Porsche shareholder Ferdinand Piech wants his group to buy Porsche's core automaking activities amd make it the group's 10th brand.

Qatar could take a stake in the combined group under that scenario.

It is up to the two families to decide, led by Wolfgang Porsche, who is said to back Wiedeking, and Piech.

German media, meanwhile, have recently reported a flurry of rumours from unidentified sources about Wiedeking's imminent resignation.

Tarnished images

Porsche has rejected the speculation, while Wiedeking told the magazine Cicero in comments to appear on Thursday that he would not "accept that Porsche is taken for a ride in the end."

The Porsche boss is backed by the head of the company's works committee, union leader and former boxer Uwe Hueck.

"We made the Porsche and Piech families rich," Hueck was quoted in press reports as saying. "We turned them into billionaires with our work, and now they want to sell us.

"We are going to fight, by all means possible," the union leader warned.

The image of Porsche and VW have been tarnished by months of haggling as both are slammed by the global automobile crisis, and a strike at Porsche would undermine VW management in the event of a takeover.

"Let's try to untangle the knots on Thursday to Porsche and Volkswagen can take on the competition and concentrate on making automobiles," Wulff suggested on Monday.


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