Porsche on the edge

[Reaper]

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.

REPORT: Porsche facing dire times, actually skirted bankruptcy in March


Wonder how many others are on the verge????

Reaper

[Reaper]

German Carmaker Narrowly Averts Bankruptcy

Luxury carmaker Porsche came very close to bankruptcy in March. Only a dramatic rescue operation saved the company, but it's still on the skids. Over the coming weeks, the sports car manufacturer -- which is up to its hubcaps in debt -- could find itself in an increasingly difficult financial situation if it doesn't swiftly merge with Volkswagen.

In fairytales, a fairy occasionally appears when the going gets really rough. The hero makes three wishes, extricates himself from various predicaments, and can look forward to eternal happiness.

In the harrowing tale currently embroiling Porsche, the good fairy is played by a sheik. Porsche managers say the company is conducting promising negotiations with the emirate of Qatar.

An investor could buy a stake in Porsche or help the carmaker, which is strapped for cash, by acquiring its troublesome Volkswagen stock options. In any case, he would give Porsche a cash injection worth billions and rid the company of all its problems.

But, for the time being, that is just a fairytale. No sovereign wealth fund that intends to safely invest its money is likely to be interested in buying a stake in Porsche or VW. Both companies appear to be in a totally chaotic state.

Merger negotiations have been broken off, then resumed. The shareholder families Porsche and Piëch are at each other's throats. Uwe Hück, a member of the Porsche works council that represents employees' interests inside the company, has called on the workforce to demonstrate against co-owner Ferdinand Piëch. And Piëch wants to sack Porsche CEO Wendelin Wiedeking.

But all backroom squabbling aside, the real problem is that Porsche needs fresh capital, or the automaker could become a total loss. "There still remains a risk of insolvency," says a VW manager. Porsche CEO Wiedeking told the supervisory board of Porsche Automobil Holding SE: The "critical situation" will continue even after an extension is granted on the €10 billion ($14 billion) in loans. And co-owner Piëch says: "None of the shareholders wants to see an insolvency."

SPIEGEL ONLINE - Druckversion - Porsche's Plight: German Carmaker Narrowly Averts Bankruptcy - SPIEGEL ONLINE - News - International

[ScoHar]

wow couldn't see that coming......

[MasterOfReality]

Porsche makes more money out of its investments than it actually does selling cars.

[danja]

It's amazed me that companies like Ferrari and Rolls Royce (their automotive division anyway) have managed to keep afloat as long as they have.

You can pretty much count on one hand the number of RRs that get sold each year, and even though they sell for exorbitant prices, I can't see it covering all the R&D, and employee costs involved. It's not a cheap business to be in.

Ferrari move slightly more product, but not heaps, plus they have other costs like sponsorship commitments in motorsport. I wonder how well these guys are doing behind the scenes.

It would be a shame to see such iconic brands disappear into history. If they did, I can't see them being replaced.

[Reaper]

It's amazed me that companies like Ferrari and Rolls Royce (their automotive division anyway) have managed to keep afloat as long as they have.

You can pretty much count on one hand the number of RRs that get sold each year, and even though they sell for exorbitant prices, I can't see it covering all the R&D, and employee costs involved. It's not a cheap business to be in.

Ferrari move slightly more product, but not heaps, plus they have other costs like sponsorship commitments in motorsport. I wonder how well these guys are doing behind the scenes.

It would be a shame to see such iconic brands disappear into history. If they did, I can't see them being replaced.

Ferrari are owned by Fiat who seem to be tripping over money right now. RR are part of BMW (?) or something along those lines. Like Paris Hilton, without rich parents they would be broke.

Reaper

[danja]

Ferrari are owned by Fiat who seem to be tripping over money right now. RR are part of BMW (?) or something along those lines. Like Paris Hilton, without rich parents they would be broke.

Fortunately for us, they are better looking that Paris Hilton