Volkswagen chairman Ferdinand Piech has entered a deal to buy the remaining stock of Porsche SE's automaking business for 4.46-billion euros. Piech is already 75 years old but is “at the peak” of his career, according to Stefan Bauknecht, a Frankfurt-based fund manager for Deutsche Bank investment vehicle DWS.
Piech started managing Volkswagen AG about two decades ago. Back then, it was losing nearly 1 billion euros ($1.24 billion) with its sales linked to the wealth of the European economy.
This agreement is expected to strengthen the company’s lead as the most profitable automaker in the world. Last year, VW broke records when it posted 11.3 billion euros in operating profit in 2011. Piech is driven by his goal to beat General Motors Co. and take its place as biggest largest automaker in the world.
And so it made changes in VW, specifically forming 12 nameplates from its local globemakers. These include heavy trucks at MAN SE and Scania AB, Audi sedans and Ducati luxury motorcyles.
Piech is credited for having brought Volkswagen into China. In fact, VW generates more sales in China than from any other Asian nation. Bauknecht said that he doesn’t believe that Piech will be complacent as it the MAN-Scania and Porsche under the whole VW umbrella, which means that the daily work has to start right away.
He added that VW shares cost went up to 7 percent in Frankfurt Thursday in response to the Porsche deal. Under this agreement, VW is allowed to reduce a tax bill of 1 billion euros to around 100 million euros.
During the past five years, the stock has increased 1 percent over the past five years, compared with a 57 percent decline for Toyota Motor Corp. and a 70 percent slump in Renault SA stock. During this period, General Motors Co. went through bankruptcy and had to restructure. [source: Autonews]