Audi lost claim to being the sole cash contributor to Volkswagen

Article by Christian A., on August 25, 2010

Audi's first-half results released last Friday indicate that it will not anymore be the sole cash contributor to Volkswagen AG -- news that is expected to relieve the concerns of VW's shareholders.

Last year, VW had been totally dependent on Audi to money required to finance an ambitious growth strategy that included acquiring almost half of Porsche's sports car business in December for nearly 4 billion euros ($5.2 billion).

Analysts had been worried that the other eight brands -- including the flagship VW marque appeared to be incapable of paying for investments without draining their own funds from operations at the same time.

Nonetheless, Audi's results reveal show that its net cash rose to 11.80 billion euros ($15.4 billion) at the end of June. This accounted for about two-thirds of the 17.5 billion euro war chest parent Volkswagen reported last Thursday.

There is a marked difference from last year, when VW's automotive business would have been in debt at the end of 2009 if not for Audi's 10.67 billion net cash contribution to its parent. Audi forecasts that liquidity at the end of this December would be higher than a year ago. Audi appears to imply that net cash could fall by over 1 billion during the course of the second half.[via autonews - sub. required]

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Topics: audi, vw, sales

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