View Full Version : AMN #1

07-26-2009, 08:52 PM
Well guys today onwards I am starting a new type of formulation in the autoworks section called Auto Motive News (AMN)..........

This is the first issue:

1.1 VW tucks into Porsche
Porsche is, after a titanic batttle, about to become a member of the VW Group. Last year Porsche tried to take over VW. VW struck back. This has been one of the great soap operas of industrial history.

The fight has encompassed money, power, glamour and a rift in one of Planet Automobile’s most high-profile families, the Porsche-Piechs.
But at an all-night board meeting last night, the boss of Porsche, Wendelin Wiedeking, was pushed out. He’d led the fight for little Porsche to buy the giant VW Group. He’d always thought he could do a better job of running VW than the VW bosses could. And you could see his point – Porsche was a basket case when he took over in 1992, and he turned it into the most profitable car company on earth.

But to swallow VW, Porsche needed huge sums of money. And the more VW shares it bought, the more expensive the rest of the shares became. In the end, despite borrowing a reported £10 billion, Porsche couldn’t get majority stake in VW.

And then there was the family feud. Wolfgang Porsche is the leading Porsche at Porsche, but his cousin Ferdinand Piech (they’re both grandsons of Ferdinand Porsche) is chair of the supervisory board over at the VW Group. They have spent the past year trying to manoeuvre a majority of shareholding family members – as well as powerful politicians and union leaders – into one camp or the other.

So what does it all mean for car lovers? Well, if Porsche had won the battle, Porsche cars would have remained low-volume, distinctive and expensive. Just a couple of weeks ago Porsche manufacturing boss Michael Macht told me the Boxster/Cayman would always be the baseline Porsche, and that they’d never do a cheaper car.
Well, that was his job title at the time. Yesterday he was given the job of replacing Wiedeking as Porsche CEO. But his power will be curtailed when the VW merger happens.

It’s overwhelmingly likely that Piech will make sure his protegee Martin Winterkorn, currently boss of the VW Group, will be given the task of running the new combined group.

And Winterkorn’s policy, which he learned at the feet of Piech, is to do as much platform sharing as possible. It was Piech, 15 years ago, who masterplanned cars like the Golf/A3/Octavia/Beetle/Leon etc.
‘Many rods catch more fish,’ Piech used to say.

I think the fact that VW, not Porsche, has won this takeover battle means it’s likely you’ll see more mongrel Porsches. For instance remember the VW Bluesport Roadster? How about a Porsche version, as well as a VW version and an Audi version? Or a Porsche rebody of the Audi Q5? Not a nice thought.

Oh and don’t feel sorry for Wiedeking. He has walked away with a £43 million package. Though he promises to give half away to local Stuttgart workers’ charities.

1.2 Koenigsaab is born
Until this morning I couldn’t reliably spell Koenigsegg. It was a little company of fewer than 50 employees making fewer than 20 cars a year. Now it has effectively taken over Saab.
Accepted wisdom is that to compete long-term, smallish car companies (of which Saab is one) need to be in the hands of bigger car corporations. Not tiny cottage industries.

But there you are. Given the way the industry is in turmoil, we can assume that accepted wisdom has all sorts of flaws. So can the Koenigsegg Group pull Saab out of its tailspin? The Group, by the way, includes the supercar company and other private investors, supported by enough loans from the European Investment Bank to get Saab out of its immediate bankruptcy.

As Foreman has written often enough, Saab has a tragically threadbare car range with which to tackle the likes of Audi. The first priority has to be getting new cars onto the road.

OK, GM has said it will allow Saab under Koenigsegg to put into production both the Vauxhall Insignia-derived new 9-5 and the Cadillac SRX-based Saab 9-4X. They should both be good, as the Insignia and new SRX are fine machines.

The new 9-5 will be at the Frankfurt Show this September, and the 9-4X comes in next year. So Saab has the prospect of a sales uplift over the next couple of years.

But GM is being cagey about how long it will continue co-operating with Saab after that. Small wonder. GM has long wanted to position Cadillac as its ‘global luxury brand’ and even when it owned Saab it strangled it in favour of Cadillac. This might have been misguided – Cadillac has been a notable flop in Europe, but even now GM is showing no signs of learning its lesson. So GM won’t be keen on helping Saab develop Cadillac competitors.

Saab, with no other parent, is going to have to find creative new ways of developing cars. Working with suppliers, possibly. Did you know, for instance, that the current Fiat Bravo was developed and got ready for production as a contract job by a supplier called Magna? So it’s been done before. (And yes, that’s the same Magna that is currently buying Opel/Vauxhall.)

What is for sure is that existing motor industry wisdom about shared platforms is about to go out of the window. The existing idea is that a global car company would develop one platform and then dress it up as different cars to be sold by its different brands.
Look at the Vauxhall Insignia as an example. The Insignia was designed to be sold as an Opel/Vauxhall. But other versions of that platform would be sold as a Buick. A Chevrolet. A Pontiac. A Saturn. And a Saab. All GM subsidiaries, enabling the platform to be built in huge numbers, and components to be bought by the million, which cuts the cost of building each car.
Well now GM has sold Saab to Koenigsegg. Sold Vauxhall/Opel to Magna. Shut down Pontiac. And sold Saturn to Roger Penske – who says he will just buy and re-badge versions of all sorts of cars, maybe not the GM ones.

Now what happens to the great co-operative venture of the Insignia platform? There will be some complex negotiations to keep the flow of components moving to the right factories now they’re all owned by different people. And the cost of building those cars might well rise.
Which means that unless they do some very clever deals, it will be hard for the new Saab or the new Opel/Vauxhall to stay in business long-term.