The controlling family of Europe’s largest carmaker has now told the carmaker to hurry up. The awkward detail is that the man delivering the message chairs the board that is supposed to be doing the hurrying.
Hans Dieter Potsch, chief executive of Porsche SE, said on 10 November that Volkswagen Group management must speed up reform work on competitiveness, cost reduction and profitability. He said the measures have to be implemented quickly and that it is time for management to deliver. Potsch is also chairman of Volkswagen’s supervisory board.
The numbers behind the pressure
Porsche SE reported adjusted profit after tax of EUR 900 million for the first nine months, down from EUR 1.6 billion a year earlier. On a reported basis the result flipped from a EUR 1.2 billion profit to a EUR 2.8 billion loss, driven by a non-cash impairment on its Volkswagen holding.
The holding company still carries that Volkswagen stake on its books at EUR 33.5 billion. The market values the same stake at EUR 11.3 billion, so the carrying value sits at nearly three times what the shares are worth. Porsche SE has warned that a further decline in Volkswagen profitability could hit the dividend and therefore its own cash inflow, because its income depends on dividends from the two carmakers it holds.
Governance as the binding constraint
Decision rights at Volkswagen are split between the Porsche and Piech family, the state of Lower Saxony and labour representatives. Family members sit on the supervisory boards of both Porsche SE and Volkswagen. That structure held a very large industrial group together for decades. It is now the thing being asked to fix a Chinese business losing share, a United States business paying tariffs and a German cost base that no longer fits the volume it produces.
The family is also building a second leg outside cars, putting money into defence technology, space, artificial intelligence and other advanced industries. That is the rational move for a holding company whose main asset trades at a third of its book value. It is also a signal about where the family expects future returns to come from.
Volkswagen is running the largest restructuring in its history. Porsche the brand is restructuring separately after weak demand and a product strategy timed badly. Neither programme is short of a plan. Both are short of a decision date, and the supervisory board chairman has just asked management to supply one.
Editor’s note: This is an adapted translation of the original Gasgoo report. It has been trimmed and restructured for readability for an international business audience. The full original (in Chinese) is at https://auto.gasgoo.com/news/202611/11I70477658C101.shtml.