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The Clash of Interests?
Wiedeking underlined that therewas no conflict of interestwith Fredinand Piëch and his demand for board representation
was in line with corporate governance guidelines. “Where are the rules that we are breaking? This criticism is non-sense.
Most people don’t even know what they are talking about.”
But there were few takers forWiedeking’s comments. Analysts say that Porsche’smove to control Volkswagen has
triggered a crisis in German corporate governance.According to a BusinessWeek article, “Piëch and the Porsche family
own 100%of the voting shares of Porsche. So the sports carmaker’s $4 billion investment inOctober to raise its VWstake
to 18.5%(with the intention of reaching 20%), gives Piëch strong influence at VW, which is both partner and competitor to
Porsche.”12 Analysts and auto industry experts figured out that without the investment in Volkwagen, Porsche risked
trouble-finding allies thatwould offer the same generous terms as in the past, since the benefits of such agreements seemed
to have flowed disproportionately to Porsche.ArndtEllinghorst, analyst at the global investment banker,DresdnerKleinwort
Wasserstein in Frankfurt, said, “The Cayenne is making huge profits. But for the next-generationmodel, Porsche risked
suddenly standing there without a partner.”13 Ferdinand Dudenhöffer, director of the German Center for Automotive
Research at the University of Gelsenkirchen, said, “Porsche, for example, invested $420million in the development of the
highly profitable Cayenne. That’s very, very little for a new car. If Porsche had done it by itself, itwould have needed to invest
between $1.2 billion and $1.8 billion. There’s no question, VWhad all the risks and Porsche earned the greatest profits.”14
Philippe Houchois, a motor analyst at JP Morgan said, “You can’t make cars without investing your own money into
manufacturing. They are pushing cash into VWto use its assets rather then building their own. It is a logic themarket doesn’t
like but it is a long-termlogic.”...
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