My Other Car is Also

These days, car trouble is a global business.

VW is looking to buy Porsche. The Chairman of VW is actually part of the Porsche family. A few months ago it looked like Porsche was going to buy VW, but when that deal fell apart, the head of Porsche and his deputy quit.

So now it looks like VW will be the buyer. Hey, VW has a strategy of purchasing distinct brands and managing them well. This acquisition should fit right in, with Porsche a niche product in the VW family.

Just don’t be surprised when VW consolidates. The world can make way more cars per year than needed, even during good times. Until capacity is reduced and factories are closed, it will be hard for any car-maker to turn a profit.

Ultimately, this is all part of the adjustment process that recessions require. Seeing VW gobble up Porsche just reminds us that Germans are capitalists, too.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T19:05:54+00:00 July 24th, 2009|Global Market Update|0 Comments

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