Porsche plans to write down stake in Volkswagen amid cost crisis
The VW logo is seen on an ID.7 electric car inside the car storage tower at the Wolfsburg Volkswagen Plant, the worldwide headquarters of the Volkswagen Group, in Wolfsburg, Germany on Nov. 15, 2024. (AFP Photo)
German automotive holding Porsche SE, warned of the potential write-down of its stake in Europe’s largest car manufacturer, Volkswagen by €7 billion ($7.3 billion) to €20 billion amid an ongoing cost-saving plan crisis.
The move underscores the mounting pressures faced by Volkswagen, including surging costs, intensified competition from Asia, and ongoing disputes with labor unions over plant closures and wage reductions.
The holding company, owned by the Porsche and Piech families, controls 31.9% of Volkswagen’s equity and 53.3% of its voting rights.
Volkswagen’s current market capitalization places the value of Porsche SE’s stake at approximately €14.3 billion, Reuters reported.
The company has struggled to finalize its financial strategy for the year due to prolonged and tense negotiations with unions over cost-cutting measures in its German operations. Consequently, Porsche SE is forced to rely on analysts’ expectations to formulate its forecasts.
Adding to the financial strain, Porsche SE anticipates an impairment of €1 billion to €2 billion on its 12.5% stake in luxury automaker Porsche AG, citing a volatile market environment. The company highlighted “further increasing uncertainties, lower-than-expected demand in various markets, and escalating geopolitical tensions and protectionist policies” as key contributors to the challenging outlook.
These developments reflect the deepening cost crisis at Volkswagen, as the automaker faces the dual pressures of restructuring and remaining competitive in a rapidly changing global market.
