Never a dull moment in the ant-eats-elephant soap, a.k.a. Porsche’s takeover of VeeDub. On the heels of what the newspaper Die Welt called the “craziest week in the history of the German benchmark index DAX,” VW’s stock makes headlines again today. Or, rather, the headlines are made by a minority owner, the state of Lower Saxony. Nearly forgotten in the broo-haha, that German province, home of Volkswagen’s headquarters Wolfsburg, owns 20.1 percent of VeeDub’s stock. By the dubious virtue of the so-called “Volkswagen-Gesetz” (VW law), Wolfburg’s stake gives the state of Lower Saxony veto power over just about anything they like or dislike. Originally, that law was intended to ward-off hostile takeovers by foreign powers. (Remember GM?) Now, it provides the legal means for provincial politics. Niedersachsen’s Governor Christian Wulff declared yesterday: “Profits going to Porsche? Not if you ask me.” And Porsche will have to ask Mr. Wulff. The thick plottenz…
Category: Germany
Reacting to the recent dervish dance of the VW stock, Germany’s stock exchange put their foot down hard yesterday. Any more funny business, and VW will be kicked out of the DAX, Germany’s equivalent to the Dow Jones. As of Monday, if a stock reflects more than 10 percent of the index, and if its volatility exceeds more than 250 percent in the preceding month, the exchange will punt the stock from the DAX. Last Tuesday, the weight of the VW stock in the DAX was 27 percent; the 30-day volatility had redlined at 388 percent. If the new rules had applied, VW would long be evicted by now. Come Monday, VW will be represented in the index with 10 percent (Achtung!) and if there’s any more hip-hop like last week, then it’s “raus, raus, mach schnell!” The German Exchange sugar coats the new rules as “preventative measures.” Not a lot of people are buying the carbohydrate. “I think, they are setting the stage for kicking VW out of the DAX,” quoth an expert, who’s name Automobilwoche did not reveal. So will they or won’t they?
VeeDub in Germany has just issued their numbers for the past nine months of 2008. Viewed through the prevailing “the world is coming to an end” perspective, VW’s financial results are financial pornography, performing better than the male lead in a Russ Meyer movie. We’re talking a 15 percent gain, a money shot of more than $6b pretax. From January to September 2008, VW moved 4.8m units and grabbed a 10.1 percent share of the world market, according to the usually reliable Automobilwoche [sub]. Despite of what’s happening elsewhere in the piston business, Volkswagen’s CFO Hans-Dieter Pötsch stands by his bullish guidance for 2008: the predicted numbers will come true. Elsewhere, China’s automakers have also released profit reports for the third quarter.
“Was uns nicht umbringt, macht uns härter.” Martin Winterkorn’s may not have quoted Freddy in his speech at the International Zulieferer Börse (IZB), related to us via Automobilwoche [sub]. But the CEO of Volkswagen’s theme was clear. “Don’t panic!” Winterkorn said (in German). VW will emerge from the crisis “stronger than ever.” Winterkorn pointed to growth markets such as China– which did little to calm suppliers’ fears (unless they were Chinese). “In China, 100 million people have a driver’s license,” VW’s capo di tutti capi said. Correct. “Only 10 million have a private car,” he added. Wrong. As a matter of fact, nobody really knows how many private cars there are in China. Gasgoo.com once had two numbers in the same article: “The total number of private cars in China jumps 32.5% to 15.22 million units by the end of 2007,” Gasgoo wrote. A paragraph later.. “35.34 million are private cars, an increase of 20.8% from one year earlier.” It’s easy to get confused in China. But if VW, China’s largest auto manufacturer doesn’t know the market’s size, who does? OK, now you can panic. [NB: the IZB is an ingenious cost-cutting measure of VW Purchasing whereby parts suppliers meet in Volkswagen’s Autostadt— and pay for the privilege.]
Things must be really bad in Deutschland. Before, any German government of any persuasion raised taxes when times were good, and raised them more when times were bad. Debates before important elections usually are about how much taxes should be raised. Imagine McCain saying: “My friends, I will tax you more than that guy.” He’d get the vote in Deutschland. Well, the German government is now worried about auto sales. Scared scheissless is probably the better term. So scared they want to abolish the tax on cars. Totally. Well, at least for a while. And in a discreet green wrapper. Says so in today’s report by the German magazine Der Spiegel. Berlin’s cabinet left it to their Minister of the Environment, Sigmar Gabriel, to give the car crazy Germans the good news this morning: No tax on environmentally friendly cars for the next two years. Zilch. Nada. Nichts. “Environmentally friendly” is defined as compliance with the Euro 5 and Euro 6 norm. Which, for all intents and purposes, means no tax for all new cars coming to the market.
Reacting to happier talk around the world, every stock on Germany’s DAX closed higher today. All stock but one: Volkswagen. After blowing through the rafters yesterday, the VeeDub share price boomeranged. Result: This morning, the DAX was in the tank by more than 7 percent. All other shares rose and did shine, but Volkswagen single-handedly brought the whole ship down. The Deutsche Börse, Germany’s stock exchange, is exasperated by Volkswagen’s wild gyrations. The Deutsche Börse is mad as hell and won’t take it anymore. As of this coming week, the VeeDub share will only make up 10 percent of the DAX, Germany’s equivalent of the Dow Jones, the Deutsche Börse decreed. Yesterday, VW represented 27 percent of Germany’s most watched index. The Euro Stoxx 50 will also reduce the weight of Wolfsburg’s shares. The German government loosed its dogs of watch to follow a trail of insider trading and market manipulation.
Market crash? Say what? Volkswagen’s stock price continue to defy market malaise and Newtonian physics. After wild gyrations last week, the Volkswagen stock– better known as WKN: 766400 / ISIN: DE0007664005– went berserk today. It opened at €500, and then more than doubled its value to €1005. At the time of this typing, it stands at €670. At its high, VW had a market cap of €296b ($369,272,943,612.85). For a while, VW was the most expensive corporation on the planet. VW represented half of the DAX, the German version of the Dow Jones. Again, it was the shorts that were caught with their pants down and the stock up. According to Automobilwoche (sub), when Porsche announced they’d raised their share in Volkswagen, it dawned on the traders “that only 6 percent of the shares are still available on the open market.” What’s more, funds that get compared with the DAX are now forced to buy Das Auto, Newton be damned. If someone played their options right, buying Volkswagen didn’t need the measly profits from a few Cayennes. While the financial world is falling apart, there is a tulip craze, Wolfsburg style. Detroit, eat your heart out.
TTAC called it over a year ago: diesel market share in Europe was destined to drop because of the narrowing gap in fuel consumption with the new “downsized” turbo-charged gasoline engines. And so it has come to pass. According to Auto Motor und Sport [print], oil burners’ share of the 2008 German new car market’s down to 30.6 percent, year-to-date. The fact that diesel now costs about the same as gas in Germany, due to lower taxes for diesel, also plays into the arithmetic. But the consumption numbers (ECE combined) for these two almost identically powered Golf IV versions really tell the tale: 140hp TDI – 5.4L/100km (43.56mpg); 160hp TSI – 6.0L/100km (39.2mpg). The TDI’s consumption advantage is down to a mere 10 percent. But the diesel engine costs considerably more. The 1.4 liter TSI engine, which combines a very diesel-like torque curve with smoothness and rev-ability, would make a terrific budget GTI in the new Rabbit.
While global stock markets are in full retreat, Volkswagen shares have soared to a 20-year high. Marketwatch has plenty of theories to explain the recent 60 percent surge: short covering, inclusion in market indices and the relatively small number of VW’s shares which trade on the open market. Even the collapse of Lehman Brothers gets an honorable mention. Whatever the reasons, “with a market capitalization of 95 billion euros, or $129b, VW is now worth more than Toyota.” Surely the big rise in VW shares has nothing to do with the company’s ongoing inability to get anything right in the U.S .market. VW’s US sales were down 9.4 percent in September and would have been even worse were it not for the introduction of the Jetta SportWagon and the Tiguan. The best explanation for the recent VW share price run-up: the tug of war between Porsche, the state of Lower Saxony and various factions within VW’s management and a related squeeze on short sellers who had bet that VW would crater along with the rest of the automotive stocks. Barron’s summed-up the situation up nicely today with this note: “Holding VW shares can be likened to musical chairs. Each time the music stops, some of the shorts cover and drop out. At some point, relatively soon, the shorts will be out effectively of the stock, and VW shares will start trading on fundamentals again. When that happens, the game will be over, and holders of VW shares will be left standing with shares that will plummet to where fundamentals dictate.” So, if you are a betting person, short some VW stock and wait for it to unfold. Me, I’ll be watching from the sidelines.
Londoners know (because a fleet of almost 100 is already running): the electric Smart fortwo is an big improvement on the original. It’s economical and smooth, without the wheezy engine and the miserable, jerky transmission of the gas-powered (or God forbid, Diesel) version. Greeny Berliners think: electric cars would be the zero-emission way to go, if you could just charge them somewhere (who has a garage in the city?) Bringing both factors together and hoping that they gel, the German government has started a project with the generic-sounding name “e-mobility Berlin”. It will be the world’s biggest e-car pilot project, involving Daimler and RWE, a utility, which will install 500 public charging stations. The charging stations will have token solar cells, but are basically about coal-derived electricity (take that, global-warming activists!) Daimler’s main motivation is to field-test its e-Smarts, scheduled for massive roll-out in the magic year (guess!) On TV, I saw Angela Merkel, Germany’s often dour, physicist-by-training head of government talk about the project with bright eyes: “It only takes two hours to re-charge the batteries? Just the time you need to go shopping!” As they say, some ways of thinking die hard.
Ding ding! Round 2! The title of “Heavyweight Ego of the World” took a new twist today. VW’s powerful works council will summon thousands of employees to protest against Wendelin Wiedeking at a VW supervisory board meeting today. Herr Wiedeking has already has to put up with rumours in the German media that he would be ousted as head of Porsche. The Financial Times (UK) reports that Bernd Osterloh, Volkswagen’s head of works council, had lashed out against Porsche’s management, saying they were “amateurs” and “arrogant upstarts”. But Mr Wiedeking has also fanned the flames by criticising Volkswagen’s management for some of their decisions. Relationships between Martin Winterkorn (head of VW) and Wendelin Wiedeking are cool to the point of frozen. Welcome to the Bobby Brown and Whitney Houston of the auto world!
Crash tests have shown that contemporary cars are pretty safe at middling speeds. You can hit a wall at 40 mph and walk away with a few bruises. But what happens at higher speeds? German automotive club ADAC crashed a five-star (Euro-NCAP) car at 50 mph and the results were not pretty. The Renault Laguna III is way up there is terms of safety, as good or better than any other passenger car (no Freedom Fries jokes here please, I've driven a Laguna and it's good). In this video, a grey Laguna hits a solid barrier at 40 mph, after which its occupants could exit unharmed (if dummies could walk). Taken to 50 mph, the orange Laguna is close to doing a Dianamobile. The A-beam collapses and the door sill folds. Physics rule; at double the speed, crash energy increases to the square, so even a relatively small increase in velocity can cause havoc. Passengers of the orange Laguna would suffer serious injury, despite being equipped with the works: chest airbags, seatbelt tensioners, and knee airbags. At the tested speed, the crumple zone is used up. Any faster and the car would basically fall apart. ADAC: "Appropriate speed can save your life". Which is not exactly news, but seeing the evidence is more, uh, "visceral" than just knowing the facts.
Germans are fond of testing the heck out of machines, no matter how oddball the configuration. They even turned testing into a world-class industry, what with companies such as TÜV expanding into unlikely places such as China. The newest and strangest crash test was carried out for the German insurance industry association, as shown in this video via Spiegel TV. Surprise, surprise! If you drive your Segway down a sidewalk at top speed (15 km per hour) and a car pulls out in front of you, the resulting crash can be fatal. "At slow speeds such as 9 km/h, the Segway is fun and safe, but at higher speeds, even a helmet cannot prevent serious injury, because the full impact force is on the driver's jaw", says test engineer Siegfried Brockman. The rest of the video is worth watching for the pirouetting meter maids, and the "World's Funniest Video"-style clips of people (including GWB) falling off their Segways. But isn't life about choices? One could wear a full-face helmet (and scare small children), or hope for an airbag-equipped Segway in 2010 (just kidding). Or maybe just walk.
The Mark V Golf GTI, released in 2006, might be the greatest car ever– better than any Ferrari or Aston. Okay, that’s ridiculous. [Fair disclosure: I own one.] The Mark VI Golf, set to go on sale in Europe early next year and– knowing Volkswagen of America, in 2019 here– will not significantly diverge from the current GTI. The next GTI will keep the current model's turbocharged, FSI four-banger with 2.0-liters of displacement. It will pick-up Audi's variable valve lift. Horsepower rises by a handful of ponies to 211. But torque rockets from 207 ft-lbs to 258 ft-lbs. Fuel economy is likely to stay consistent or even improve. The big concern for VW: will that high torque number count against European rivals offering more horsepower? As all these competitors are front wheel-drivers suffering from serious wrist-wrenching torque steer, maybe VW has the right idea. Which reminds me… the six-pot R32 goes away. In its place, a hotter GTI will feature VW/Audi's 2.0-liter turbo engine boosted to 265 horsepower, routed to all four wheels. Yum.
Press releases aren't supposed to be funny, but occasionally, one comes out that you can't help but laugh at, either for the product it's promoting, the way it attempts to make it sound unique, or both. Case in point: Toyota's release describing the "Design Ins and Outs of the 2009 Toyota Venza." Having seen pictures of this bastard child of a Camry and an Aztek, I think it would be better described as the "Design Do's and Don'ts," with emphasis on the don'ts. They struggle to find a way to describe it, settling on "not an SUV, not a wagon, not a coupe and not a sedan." So what the Hell is it? They say it "incorporates SUV utility and roominess, while maintaining passenger car essentials, such as ease of ingress/egress, performance, a lower, sleek
side profile with aerodynamic lines." Uh… doesn't that pretty much describe a station wagon? Anyway, the design incorporates "Toyota's design philosophy, ‘Vibrant Clarity'" (which sounds like a Honda FCX with a tire out of balance) to produce "look-at-me" styling. Inside, it has a "floating…60/60 center dashboard" that makes spatially-challenged drivers and passengers "feel as if 60 percent of the space is in their personal zone." There's more, but I'll let you read it for yourself.
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