Porsche Backs Away From VW Majority This Year

STUTTGART, November 26, 2008: According to Bettina Mayer, writing for Automotive News Europe, CEO Wendelin Wiedeking said it is increasingly unrealistic to achieve the goal to take control of VW this year in the current economic environment, which is hitting sales of its sports cars.

Wiedeking reaffirmed his intention to take Porsche's stake in VW to 75 percent in 2009. Porsche currently holds a 42.6 percent stake in VW.

Porsche finance chief Holger Haerter said that Porsche is not willing to acquire VW shares for "economically ridiculous" prices due to the significant writedown risks to goodwill.

Porsche shares were up 8.5 percent at 57.261 euros at 10:33 CET, while VW was up 12.2 percent at 286.0 euros

Wiedeking said signs of a severe slump in demand in the global automobile industry are highly visible and "Porsche cannot escape this overall downward trend."

Porsche expects a fall in sales during its current 2008-2009 business year. Its sales in the U.S, which is Porsche's biggest single market, have fallen sharply.

Wiedeking said Porsche has initiated a cost-cutting program given the weak auto markets.

Last year Porsche earned 8.57 billion euros ($11.13 billion) before tax -- more than its revenue -- after making a windfall 6.8 billion profit from hedging against a rise in VW shares.

Porsche would like to take full control over strategic decisions at VW and VW's profits next year, but both German law and VW statutes give VW's home state of Lower Saxony the right for now to veto these plans with its 20 percent stake.

Wiedeking insisted that his company was in no rush to tighten its control of VW, which is Europe's biggest auto manufacturer.

"We are under no time pressure," Wiedeking said.