European Court strikes down VW Law, Porsche takeover now possible
by John Neff on Oct 23rd 2007 at 12:26PM 
While Porsche has been gobbling up stake in Volkswagen for about a year, a little piece of legislation called the VW Law has been the only thing preventing the sports car builder from gobbling up the giant German automaker. Currently Porsche holds a 31% stake in VW, but with news today of the European Court striking down the VW Law, many expect the company to quickly increase its stake to a controlling 51%.
The VW Law itself dates back to 1960, and while a bit complicated to understand, basically stipulates that 80% shareholder approval is required to pass major decisions and regardless of how much stake a single entity holds, its voting block cannot be greater than 20%. Since the company's home state of Lower Saxony owns 20.1% of VW, it alone holds the power to influence the company's decision making. Under the VW Law, it has held the power to block any decision that would threaten its jobs and local economy. Thus, Porsche's desire to own a controlling stake in VW has been blocked by Lower Saxony as well as its inability to use the full force of its 31% stake in voting.
Porsche has been very patient so far, and will apparently remain so a little longer. It is not expected to increase its stake in VW before the end of the year, but everyone seems fully aware that today's historic news means that the company will sooner or be controlled by Porsche.
[Source: Automotive News, sub. req'd]
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Reader Comments (Page 1 of 1)
Brett- BMW Advocate 12:54PM (10/23/2007)
There could be no reason why Porsche shouldn't control VW. Its basically harmless and VW wouldn't change unless for the better.
Good for Porsche.
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zamafir 1:34PM (10/23/2007)
@Brett, Ditto. No one knows how to run a company like porsche... they'll focus VW for the better, the only issue is that Porsche has publically stated they're averse to bugatti, lambo, and the R8 :/.
Random Task 1:35PM (10/23/2007)
Excellent. Now Porsche can bring all their reliability expertise to VW. LOL.
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zamafir 2:06PM (10/23/2007)
yes... most reliable luxury car of 06, most reliable brand according to JD power (topping lexus) 06, most reliable brand according to JD power (intial quality survey june 07), consistently the best brand as rated by those we depend on for quality surveys. I'm not quite sure where you're information stems from? the 914 from decades ago maybe?
Random Task 2:33PM (10/23/2007)
Who are you kidding? Porsches are unreliable and expensive to fix. Even the crappy JD Power Long Term (first 3 years, what a joke!) dependability ratings show them much worse than industry average. The initial quality rating is a total joke, and a total straw man. The only reason there are so many on the road is that their owners like to drive them a lot, so they fix their sorry cars.
Kevin 3:33PM (10/23/2007)
They're easily more reliable than any of their European competitors save for perhaps the M3, though they may or may not be as *reliable* as a Corvette or a Viper, I don't really know.
But they're screwed together a lot better than either of the American cars (when was the last time you heard of a Porsche's roof panel flying off because the glue holding it down was defective...?) and no Chevy or Dodge interior would make it 300k+ without falling to pieces.
ebm14 8:07PM (10/23/2007)
Porsche is highly rated according to LD Powers!!!
It might be a few years for quality control to trickle down to VW, but I think VW has been building overall good cars.
Japanese cars, such as the Civic and Camry have had recalls left and right, nobody is that perfect, but Porsche
is helpful and should take an iron fist to flatten out VW
service bureaucracy.
Rick 2:31PM (10/23/2007)
...or later....
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wushu 2:43PM (10/23/2007)
The EU needs to step in and rule separately to prevent Porsche AG from taking over VW. At the very least, it should force Porsche AG to divest its share of Audi. Allowing Porsche AG to take over Audi would be very bad for consumers and for fair market competition. Porsche has already killed the 6-cylinder version of the Audi R8, which was to be a 400+ HP mid-engine Aluminum-alloy with DSG and the famed Audi interior competitor to the Porsche Cayman S priced at less than the base Cayman non-S. It's no wonder Porsche AG would pay any price to control Audi.
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CoffeeJones 5:36PM (10/23/2007)
Yeah. Too many formerly independent companies stepping on each other's toes.
V10 R8? Sold cheaper than Gallardo? Maybe it's not as eye catching is a Lambo, but really now.
What about the 911 Turbo or GT3? Some people want a Porsche for the sake of its classic style, but it's toe to toe a bunch of other cars.
As far as Porsche reliability, the previous gen Boxster was a disaster, the newer one is better, but...
Devon 2:52PM (10/23/2007)
Dear Ford,
You are not the giant you once were in U.S. domestic market sales. It is not because the japanese manufacturers can build a better car and at THOUSANDS less than the UAW will allow Detroit to. It is because their design language is more evocative of things the american public actually wants to see and platforms that they want to drive.
I purchased in 2006 a VW Rabbit 2.5l 5 cyl because, quite honestly, it was not only the most car for my dollar, but because it was FUN to drive- unlike your comparable offering in the Ford Focus.
Give americans what they want: fun, economical cars that don't look as though they've been carved whole out of a block of wood.
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Random Task 2:57PM (10/23/2007)
I'm sorry for you in advance.
Kevin 3:37PM (10/23/2007)
Anybody that thinks VWs are economical hasn't owned one after the warranty has run out.
Richard Warren 3:52PM (10/23/2007)
And---guess who one of the largest the largest shareholders is? Dr. Ferdinand Piëch. Hmmm
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Alex 4:04PM (10/23/2007)
..
Bye-bye, Audi R8, we hardly knew ya..
..
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Tim 4:06PM (10/23/2007)
Check the most recent post in the numbers label at http://www.goodcarbadcar.net and you'll see the math simplified (and learn some other stuff, too). What strikes me as most astounding or interesting is the Porsche/Bugatti/Lamborghini/ performance team, rightly throwing in Audi with its R8 and even Bentley. Covering every possible sporting niche, they are.
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Val 10:50PM (11/04/2007)
That sounds plain wrong... at least for audi, VW as a brand hasn't got much to lose from this deal, but it could be a big blow to audi.
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testa di cazzo 1:58PM (11/28/2007)
yes, and it could be an even bigger blow for Lamborghini, and sadly, it could be the killer blow for Bugatti, which Porsche has already openly stated they will kill when they take over VWAG...
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