• May 25, 2009
These are some confusing times in the automotive world. For the past few years, it seemed as though Porsche was primed to rule the world. It was selling plenty of product, and more importantly, it was quickly gobbling up shares of German juggernaut Volkswagen. Dried-up credit markets and slow sales have conspired to put a big wrench in Porsche's plans, though.

We already knew that the Stuttgart sports car (and SUV) maker has ditched plans to take over VW and instead plans to merge the two companies. German magazine Der Spiegel (via The Local) is reporting that times are so tight at Porsche that it actually skirted bankruptcy for three days in March. The German automaker received a 700 million euro loan ($978 million USD) from VW to stay out of trouble, but needs another 2.5 billion euros (nearly $3.5B USD) to stay in business. Porsche has tried to tap the German government to receive more loans to pare down the enormous debt it had incurred in attempting to buy VW. In fact, Porsche, which sells fewer than 100,000 vehicles per year, has accrued an astonishing 9 billion euros worth of debt (around $12.6B USD). That's 50% more debt than Chrysler.

[Source: The Local | Image: Michael Latz/AFP/Getty]


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    • 1 Second Ago
  • 52 Comments
      • 5 Years Ago
      Whoops!

      I hope they don't try to claw back that cash by further increasing prices on parts... $900 for an i-pod connector from Porsche in Europe!
        • 5 Years Ago
        Mind you, it only works with white ipods, ze black ones are instantly burned! :O
        • 5 Years Ago
        Hope it's better than the BMW-made Mini Cooper iPod connector that immediately fried my friend's iPhone upon connecting.
        • 5 Years Ago
        Ahh, but that's a GERMAN-spec iPod connector! No doubt designed and hand-made by a blue-eyed, square-jawed ubermensch! Worth every bit of that $900!

        /

        • 5 Years Ago
        Exactly. Far superior to any other connector on the planet. This one will last for 1000 years!
        • 5 Years Ago
        bye porsche, and vw, and audi, and lamborghini, and bentley, and bugatti. It's been a fun ride.
      • 5 Years Ago
      So while Chrysler tried to be "bought" by somebody in order to be saved, Porsche tried to "buy" somebody to achieve the same result.

      Now that's what I call proactive approach :-)

      (using " " is to avoid confusion, it could have been merger, takeover, acquisition etc... )
        • 5 Years Ago
        N,

        Do you really want to engage in a debate on pre-emptive strikes?

        I welcome the challenge but I don't think Autoblog discussion forum is the appropriate venue for such a dispute.
        • 5 Years Ago
        At least Chrysler's debt was 'accidental' due to poor planning by former management.

        Porsche 'intentionally' accrued massive debt during a recession, thus voluntarily hopping into Chrysler's shoes.

        Chrysler was unknowingly killing themselves for 10 years and spent the last 2 trying to fix it.

        Porsche was kicking ass the last 10 years and spent the last 2 committing suicide.


        You tell me which is dumb and dumber? I can't decide. =P
        • 5 Years Ago
        MGBYG,

        I do not suggest anything.
        • 5 Years Ago
        Kitko, are you suggesting N forgot the Turd Reich: Bush, Rumsfeld, Cheney and Karl 'turdblossom' Rove??

        Most Yanks are trying to forget them, indeed!

        (But this is an autoblog and politics are a no-no! Making and selling polluting machines that are part of 50,000 deaths a year in the USA is totally politics free, don'tchaknow)
      • 5 Years Ago
      Man, the drama and incestuous relationship between VW, Audi, Porsche and Lower Saxony is hard to follow. Just throw in some sex and German supermodels and we'd have a a blockbuster HBO special. The "Auto-Mann Empire", or something. :)
      • 5 Years Ago
      Toyota loses several billions more than GM; Porsche turns out to have double the debt of Chrysler. I'm waiting for the Renault-Nissan explosion due any day now. That should be a real Lola-palooza of a collapse, given the vast leveraging prevalent in Japan.

      Nissan was close to Bankruptcy in th last auto recession, before Ghosan and the French government stepped in. Now the hole is probably a lot bigger and deeper. We shall see.

      Meanwhile as the Republican Senators led by Senator Corker proposed, the US is conducting a pre-packaged bankruptcy with a lot of the work done in the past few months, before the official Bankruptcy is declared. By the time Chrysler went in, almost all the heavy, hard decisions, except the dealer network pare-down were accomplished.

      Similarly, lots of the preliminaries are being done at GM.
      The brand paring from what was suitable with a 60% market share has has been re-defined for the current 20% market reality. A new business plan with a break-even suitable for a depression 10 million unit market, has been promulgated and approved.

      The UAW and CAW are falling into line and wages will equal transplants now, not in the sometime Future. The VEBA agreements have been negotiated,removing Legacy costs, and the bondholder offered a bankruptcy settlement. They are still objecting and negotiating, but it appears that the majority of all the shares are ready to settle. In Bankruptcy the judge can accept a majority expression of opinion for any class of of debt-holders. Like Chrysler's model it will be a pre-determined in and out.

      The Domestic automakers will be free to compete with the rest of the world for the first time since the 1960s.

      Now if the CAP & Trade tax is defeated which would destroy the US Steel industry now dependent on electricity prices, and also the US car industry dependent on that competitive steel industry, will eventually reamerge as the most competitive in the World. Like the US steel industry arose from the Ashes.

      • 5 Years Ago
      "And Chrysler, GM, Ford have any less history? All 3 of them have been around longer then all those automakers you mentioned. I don't see anyone saying they should be immune to bankruptcy."
      -------------------------------------------

      Uh no, Chrysler has not been around longer than Maserati...

      • 5 Years Ago
      Unfortunately, America is too good in exporting its management ideas and financial practices. It wasn't good enough to be highly profitable, Porsche had to use leverage and reach for more. All that profitability was a product of overleveraged Americans buying Cayennes anyways.

      We'll look back and see all those ideas espoused by consultancies, business schools, and investment bankers discredited. Hopefully, we'll move away from this gambling mentality and produce real value that benefits society as a whole. The so-called value and productivity released by all the dealing and restructuring will be seen to have benefited a very few.
      • 5 Years Ago
      Im going to LMAO if they go under.
      • 5 Years Ago
      Posche itself is healthy but their money is bound in VW shares. they could sell some of their stake but they want to be in control of VW not vice versa, so now they are trying to find an outside investor to get the rest of the VW shares.
      • 5 Years Ago
      I have been wondering for months how Porsche, a low volume manufacturer, could buy the juggernaut that is VW. I guess the jig is finally up. I don't think the Panamera will help...
      • 5 Years Ago
      A range consisting of a bankers bauble, a banker's wife's projectile brick, and now a motorised duck billed platypus is, perhaps, heading for trouble. Porsche has looked a bit tired for a while now.
      • 5 Years Ago
      Mind you, it only works with white ipods, ze black ones are instantly burned! :O
        • 5 Years Ago
        damn it, was supposed to be a reply to the ipod connector post :X
      • 5 Years Ago
      Piech must be upset.
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