Porsche holding company warns of writedown in Volkswagen stake of up to €20bn

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Porsche SE expects to write down its stake in Volkswagen by up to 40 per cent, as the uncertainty over potential plant closures and strikes forced Europe’s largest carmaker to withhold its annual financial plan.

The Porsche-Piëch family’s holding company on Friday said it expected to write down the value of its stake in VW by between €7bn and €20bn, as the lack of financial data from the company meant it had to rely on analyst expectations.

For the same reasons, it expected to write down its stake in sports car maker Porsche AG, which was partially listed in 2022, by €1bn to €2bn.

Porsche SE added that the book value of both stakes would “continue to be significantly higher than their respective stock market values”.

As of September, Porsche SE valued its 53.3 per cent stake in the voting stock of VW at €51.5bn and its 25 per cent plus one share holding in the voting stock of Porsche AG at €10.5bn.

The announcement of the anticipated writedown comes as VW prepares to enter the fifth round of negotiations with union IG Metall on Monday, amid a stand-off with workers over plans to close some German factories and lay off tens of thousands of workers.

IG Metall and VW’s powerful works council have fiercely resisted the restructuring plans, which executives have argued are necessary due to a structural decline in European sales of cars.

Chief financial officer Arno Antlitz in September warned that VW’s flagship brand now sells roughly 500,000 fewer cars annually than it did before the pandemic.

Over the same time period, the brand’s share of sales in China — its most profitable market — has nearly halved, amid a consumer shift towards electric vehicles and hybrids and growing competition from local competitors there such as BYD.

But worker representatives have argued that simply cutting costs will not address the decline in sales and have accused executives of making poor product decisions.

On Monday, workers at the majority of VW’s German plants downed tools for the second time in a month, walking out from their shifts four hours early — twice as long as the walkouts in the week prior.

IG Metall has warned that if VW does not abandon its plan to close factories, strikes will become more intense.