Lower Saxony Must Leave Car Business

As the dust settles, analyst are starting to question the true motive of Porsche acquiring a 31% majority share of VW. Automobilwoche Editor Guido Reinking speculates the VW Chairman Ferdinand Piech may want to make VW a wholly owned subsidiary of Porsche in an effort to protect and maintain the family business. Piech's family controls 100% of Porsche.

Despite the speculation Reinking urges that Germany's Lower Saxony who owns 20% of VW should relinquish its interest in light of the Minister President of Lower Saxony Christian Wulff (CDU) considering increasing its stake to 25% which will cost $1 billion. Reinking writes Lower Saxony's involvement with the auto maker has been as damaging as VW's struggle with IG Metall, German metal workers union. The red tape of VW management, unions and politicians has suffocated VW by preventing much needed restructuring.

Originally, Lower Saxony's move into the auto business was intended to protect VW from foreign takeover with their blocking stake. But the latest majority position of Porsche makes that directive null and void as soon as the European Court of Justice will "overturn the so-called "VW law" which limits the voting power of VW shareholders to 20 percent regardless of the size of the stake they hold," Reinking wrote. Repeatedly, the CDU calls for less government and support for the German market which clearly is contradictory to Wulff's possible stake increase.

Reinking also speculates that Lower Saxony considering a stake increase in VW is politically motivated since Wulff gets more more air time as a major VW shareholder. Therefore, he would use that exposure to boost his career as a politician. Reinking writes, "German states should do many things to make the lives of their citizens more pleasant: Build roads and schools, reduce the tax burden, boost the economy, fight crime and protect the environment. Auto manufacturing isn't one of them."