To help Porsche develop its new Macan SUV
, the German state of Saxony (where Porsche’s Leipzig factory is located) has pledged to contribute 43.7 million euros ($53.7 million) to the project.
In addition, Saxony has agreed to further-but-unspecified aid, likely tied to the expansion of the Leipzig plant. Porsche is expected to add as many as 1,000 new workers, which would reap a huge economic benefit for the region’s economy, which has not prospered as much as other former East German states..
Although Saxony followed the proper procedures in notifying European Union regulators of its intent to render government assistance, Reuters
says there’s now some question as to whether or not the state investment gave Porsche an unfair advantage over other European rivals.
European regulators will now review Saxony’s pledged investment, especially in light of Porsche’s strong sales growth (up 14-percent year-to-date) and recent sale to the Volkswagen Group
. For it’s part, Porsche says it was necessary to request state aid, referencing the benefit to both itself and to the regional economy.
Should the regulators find that Porsche
breached European Union rules, it’s unclear what the punishment would be, but fines are a reasonable expectation. No matter what the outcome, it's unlikely the investigation will delay development of the Macan