German luxury sports car maker Porsche, which made an aggressive move to take majority stake in the world's third largest and Europe's biggest automaker Volkswagen AG, now says it will not buy VW shares for the time being due to falling sales and the slowdown in the global car market.
Porsche had increased its stake in VW to 42.6 per cent, after receiving the necessary permission, as part of its wider plan to acquire more than 80 per cent stake and take control from VW's other shareholder. The German state of Lower Saxony holds a minority 20 per cent that enables it to block a complete takeover, according to German law and VW's own statute.
Speaking at the company's annual conference in Stuttgart, Germany, Porsche chief Wendelin Wiedeking said: "In view of the current economic climate, it is more and more unlikely that we will achieve the goal this year" of raising stake in VW from the current 42.6 per cent to more than half.''
"Our aim remains to increase our stake to over 50 per cent... as quickly as possible. But we have always said that we would not do anything unreasonable," but, he hoped to hold more then 50 per cent of VW shares by the early part of 2009 but not at "economically ridiculous" prices of Volkswagen, which is up 12.2 per cent at €286.
Wendelin said that at some point his company would like to have total control over decisions and profits at Volkwagen. He also said the Porsche had started implementing cost cutting and extending the holiday break for its employees due to decline in demand for luxury sports cars in the US, which is its biggest market.
The luxury sports car maker also said that sales in the first four months were down 18 per cent and the company would not be able to match last year's sales of 98,652 cars.
Finance director Holger Haerter said the auto industry was in a bad shape as weak sales also hit parts suppliers and many of them were likely to go bankrupt.
Last year, Porsche became the world's most profitable automobile manufacturer, with its profits soaring to €8.57 billion ($11.13 billion) before tax and a massive profit of €6.8 billion from hedging VW's shares.
Wendelin also came down heavily on the 'Big 3' US automakers for seeking a bailout from the US government for their self-inflicted problems caused by their huge discounts and low leasing rates.
The EU commission, however, is coming out with its own plan of providing €5 billion to European carmakers for developing eco-friendly cars and using green technologies.
But the commission feels that $25-billion bailout for the Big 3 US automakers is not in line with WTO rules and could invite complaints by other car manufacturers.