Porsche likely to buy VW this month

Volkswagen has a bit of a reputation in the German auto industry as carrying some “bloat”. Workers are paid 20% more than the German average, the company has funded the high-profile but incredibly costly Bugatti Veyron, and remarkably few synergies have been developed with its other automotive divisions such as Audi. Recently appointed VW CEO Martin Winterkorn has been working hard to change some of VW’s ways, but Porsche’s entry as majority shareholder will likely shake things up even more.

An outdated law, known as the “VW Law” has prohibited any entity from holding more than 20% of the voting rights of the Wolfsburg auto maker, no matter how much stock they hold. A decision by the European Court of Justice expected to be issued October 23 will declare that law to be in violation of EU rules. The upshot is that Porsche will be expected to increase its holding of VW stock to 51%, achieving majority ownership and majority voting rights.

Wendelin Wiedeking, Porsche’s CEO, has been turning things around at the premium performance auto maker for the last several years, increasing efficiency and decreasing production and development times. Wiedeking is reportedly looking to use techniques to trim the fat from VW’s corporate bottom line, according to Automotive News. The take-over isn’t without its potential hassles, however. Wiedeking has said that he’ll only allot half the seats on the corporate labor board to VW, despite VW’s 324,000-member labor force dwarfing Porsche’s 12,000 workers. Bernd Osterloh, head of VW’s workers council, said he’d sue Porsche if they went ahead with such a plan.