REPORT: Porsche facing dire times, actually skirted bankruptcy in March
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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Reader Comments (Page 1 of 4)
Kitko 11:46AM (5/25/2009)
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... )
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BigMcLargeHuge 12:15PM (5/25/2009)
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
Kitko 1:28PM (5/25/2009)
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.
MGBYG 1:54PM (5/25/2009)
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)
Kitko 3:12PM (5/25/2009)
MGBYG,
I do not suggest anything.
jpm100 3:55PM (5/25/2009)
@ BigMc,
"At least Chrysler's debt was 'accidental' due to poor planning by former management. "
Chrysler wasn't doing much of anything considering it was run by Daimler who booked out of town as soon as they found Cerberus to take the leftovers.
But poor parents aside, who has global banking fraud in their business plan?
Max 1:31AM (5/26/2009)
Kitko, wrong.......Porsche was an ENORMOUSLY profitable company until it tried to take over VW. It is its bad use of credit in the attempt that killed it.
Quite amazing how one can go from top-of-the-game to squeaking by bankruptcy in no time.
A spectacular fall for Wiedeking, a lifetime success for 'Auto boss of the century' Ferdinand Piech.
N 11:46AM (5/25/2009)
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!
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the friendly grizzly 11:56AM (5/25/2009)
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!
/
KarlW 12:22PM (5/25/2009)
Exactly. Far superior to any other connector on the planet. This one will last for 1000 years!
ff 4:11PM (5/25/2009)
Mind you, it only works with white ipods, ze black ones are instantly burned! :O
zamafir 8:29PM (5/25/2009)
bye porsche, and vw, and audi, and lamborghini, and bentley, and bugatti. It's been a fun ride.
tekd 12:30AM (5/26/2009)
Hope it's better than the BMW-made Mini Cooper iPod connector that immediately fried my friend's iPhone upon connecting.
BigMcLargeHuge 11:59AM (5/25/2009)
That would have been ironic as hell if Porsche declared bankruptcy in March while the 'most profitable automaker' tagline was being towed around.
I figured their perception of 'profitability' had to be based on 2006 info, and not relevant in 2008 when Porsche sales dipped by around 50% some months.
The only reason Porsche ever became highly profitable earlier in the decade was that soccer moms went bananas over being able to own an SUV and a Porsche simultaneously, the Cayenne.
Obviously the Panamera was another attempt at diversifying their portfolio. Too bad that car is fail.
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Jared 2:04PM (5/25/2009)
They're profitability was based on options trading, not on selling cars.
Jared 2:05PM (5/25/2009)
*their
It still amazes me that Autoblog.com can't offer simple editing of comments.
d4rez 3:48PM (5/25/2009)
"Obviously the Panamera was another attempt at diversifying their portfolio. Too bad that car is fail. "
You couldn't explain that one to me, could you?
Richard S. 12:03PM (5/25/2009)
Porsche became a hedge-fund that invested in VW shares. They drove the stock up and had a nice profit. The market turned and they are getting margin calls. They should have stuck doing what they do best rather than play financial alchemism with options.
Perhaps Audi could buy Porsche now?
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MGBYG 1:39PM (5/25/2009)
A wholly-owned subsidiary of VW-AG buying Porsche...uh, what??!
(are you pondering SEAT, Skoda, Bentley, or Lamborghini doing the same?)
Andrew 3:34PM (5/25/2009)
You really don't know your car brands do you?