Auto Union – The New Group Formed By The Merger Of VW And Porsche

There have been rumor from late July when Porsche announced that the company’s CEO Wendelin Wiedking would be resigning his position and would be replaced by Michael Macht to lay foundation of a joint business under VW leadership. The news have been confirmed by two VW supervisory Board members that Volkswagen and Porsche have broadly agreed to sign a deal and to have a joint business

The combined entity would be led by VW CEO Martin Winterkorn and would be recognized under the brand name “Auto Union”.  It has been decided to offer a new name to this merger to make it clear that it is not only VW who will be running the whole show.

The Auto Union name originally belongs to a merger of four German auto makers viz. Horch, Audi, DKW, and wanderer in 1932. The brand gained familiarity in motorsport but went kaput during World War II.

Porsche would be the tenth company to join the VW brand wagon after Bentley, Skoda, and truck maker Scania. The new CEO has confirmed that Porsche would however continue to be an independent company headquartered in Stuttgart.

It has been mutually decided that VW would buy a 49% stake in Porsche, the sports car unit of Porsche Automobil Holding SE.The new CEO added that this is the first step in creating an integrated automotive group by the end of 2011.

Porsche has decided to sell some voting share to Qatar as a part of the capital increase but it is still unclear whether Qatar would take voting shares in Porsche, VW or both.

VW  CEO described the  company s plan by saying that  both VW and Porsche have been in the auto industry for long and  have an excellent know how at their disposal. Both the companies can effectively use their resources by combining them. This would create additional growth opportunities, create new jobs, and safeguard the existing jobs.

Like Audi, Porsche can however continue its independent entity and preserve its identity.

Martin Winterkorn added that “We have great respect for the achievements of the Porsche workforce and are convinced that Porsche can enrich the Volkswagen Group – just as Volkswagen can vice versa enrich Porsche.”

The merger may be an advantage to both the companies as  both the brands are powerful brands rich in tradition and technical know how, they can efficiently use the resources of one another to move ahead at the same time may be advantage to the whole of automobile fraternity.

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