| Porsche AG's 911, a $72,400 sports car, helped make | | | | euros of assets at SEB Asset Management in |
| the carmaker the world's most profitable in 2006, says | | | | Frankfurt, including Volkswagen and Porsche shares, |
| a Bloomberg report. Meanwhile, CEO Wendelin | | | | noted that the collaboration between Porsche and |
| Wiedeking says earnings will grow even more thanks | | | | Volkswagen is extremely vital to Porsche. |
| to models such as Volkswagen AG's Golf, a $15,000 | | | | Bloomberg recently surveyed 36 analysts to know if |
| hatchback. | | | | they are in favor or against the holding of |
| A significant number of critics mocked the decision of | | | | Volkswagen’s shares. Of 36 analysts surveyed, 17 |
| the German sports car manufacturer to acquire a | | | | including Kohlhoff recommend selling the shares. |
| stake in Volkswagen a couple of years ago. Now, | | | | Furthermore, 13 rate the shares “hold'' and six rate |
| they are silenced by the clear showing of VW’s | | | | them “buy.'' |
| quintessence in the manufacturer’s auto industry | | | | “The influence of Porsche management at VW |
| existence. Their analysis could have been clouded by | | | | could prove significant,” said Avaneesh Acquilla, an |
| a Volkswagen vent visor. But, at present, it is high time | | | | analyst at UBS Ltd. in London. “Volkswagen is |
| for them to realize the salient point behind the | | | | increasingly the dominant share-price driver'' for |
| acquisition. | | | | Porsche. |
| Wiedeking, 54, said in an interview that the company | | | | The tie-up has brought out the best of both |
| may extend the luxury car's share-price gains by | | | | companies. “Volkswagen has become leaner,” |
| raising the stake and using Porsche's influence to | | | | said Andreas Dittmer, who helps manage about 3.5 |
| transform Europe's biggest carmaker. Analysts and | | | | billion euros in assets at Apo Asset Management in |
| investors added Porsche's experience in lean | | | | Cologne, Germany, including Volkswagen shares. |
| production will boost Volkswagen's profitability, while | | | | On the other hand, Porsche is entitled to almost a third |
| the companies will save by sharing development costs. | | | | of Volkswagen's dividend, which was 497 million euros |
| At present, profit of the German Volkswagen, now 31 | | | | in 2006. Porsche's profit will rise “significantly - and I |
| percent owned by Porsche, is creeping up since its | | | | mean significantly” this year because of |
| tie-up with the Stuttgart-based automaker. Additionally, | | | | Volkswagen, Wiedeking said on June 26. |
| the partnership has helped Porsche’s shares more | | | | This is the obvious reason why Porsche is tightening its |
| than double. | | | | grip on Volkswagen. The huge slice of savings could |
| “Porsche knows how to take care of itself and | | | | be attributed to the sharing of technology as well as |
| stands to gain significantly from its ownership in | | | | production costs. According to Bloomberg, since 2002, |
| Volkswagen,” said Peter Braendle, who helps | | | | Volkswagen has built the body of Porsche's Cayenne |
| manage about 63 billion Swiss francs or $52 billion in | | | | sport-utility vehicle, which shares a platform with the |
| assets at Swisscanto Asset Management in Zurich, | | | | VW Touareg and the Audi Q7. |
| including shares in both car companies. | | | | “Research and development is the biggest cash |
| According to Adam Jonas, an analyst at Morgan | | | | drain for car companies,” said Thomas Aney, an |
| Stanley in London, Porsche's profit may grow to more | | | | analyst at Dresdner Kleinwort in Frankfurt. “Porsche |
| than 3 billion euros or $4.1 billion in five years from 1.39 | | | | is going to save a ton of money piggy-backing on |
| billion euros in the 12 months ended July 2006. Jonas | | | | Volkswagen.” The companies are working on |
| expects the company's shares to reach 1,650 euros | | | | gasoline-electric versions of their SUVs, and Porsche |
| within a year, compared with Thursday's closing price | | | | may begin offering diesel engines in its vehicles, a |
| of 1,330 euros. | | | | technology Volkswagen specializes in, Aney noted. |
| Juergen Meyer, who helps manage about 1.3 billion | | | | |