Arabian knights

By Christopher Tan

The most sensational automotive news last month was not General Motors and Chrysler going broke.

As significant as that was, it was no more surprising than the sun rising from the east.

It was not even the headline-hogging Chinese vehicle market, which posted another double-digit growth in sales to 6.1 million units in the first half.

That the juggernaut would overtake the American market, and by a convincing 27 per cent in the first six months, was also a matter of time.

The earth-shaking news was how Volkswagen, the world's third-largest vehicle group owned by two of Europe's proudest families, ended up being partly in the hands of a tiny Gulf state.

The story started four years ago, when Porsche bought into VW to prevent the company, its biggest parts supplier and manufacturing partner, from being acquired by others.

Well, the stake got bigger and bigger and Porsche eventually launched a takeover of the behemoth. With little surprise, that failed.

VW then turned the tables and swallowed the sports-car maker.

The tale had all the ingredients of a good soap opera, with the heirs of Ferdinand Porsche assuming crucial behind-the-scene roles.

In the final act, Porsche chief Wendelin Wiedeking was paid €50 million (S$103 million) to resign.

The sum, which makes ex-GM chief Rick Wagoner's severance of US$10 million (S$14.3 million) seem paltry, could have been €140 million had labour representatives not objected.

To be fair, it was not all Mr Wiedeking's doing.

If he was responsible for saddling Porsche with billions in debt from the failed takeover, he was also credited with turning it from near bankruptcy in the 1990s into one of the most profitable carmakers.

And he has pledged half his payout to charity.

The upshot of the saga?

A sizeable portion of VW has landed in foreign hands.

Qatar, which acquired VW stock options from Porsche earlier, will now hold 17 per cent in the enlarged VW Group, making it its thirdlargest shareholder.

About 50 per cent of the company remains in the hands of the Piech and Porsche families, while the German state of Lower Saxony has 20 per cent.

Who knows, Qatar might acquire more of VW.

The kingdom's coup is yet another piece of an emerging jigsaw that features more Middle Eastern interest in the world's top car brands.

Abu Dhabi's ruling al-Nahyan family owns 5 per cent of Ferrari.

The United Arab Emirates owns 9.1 per cent of Daimler.

Kuwait, Daimler's other Gulf owner, holds a 6.9 per cent stake.

Kuwait also owns 50 per cent of Aston Martin.

And Abu Dhabi's investment arm Aabar has a 4 per cent stake in US electric-car maker Tesla.

It is interesting to note that the one region in the world without a car-making industry, and one which is oil-rich, is now part-owner of some of the most enticing marques.

The lesson in the whole VW-Porsche affair? Never bite off more than you can chew.

Two other pieces of automotive news emerged last month.

While nowhere as intriguing as the David-Goliath tale gone awry in Germany, they are noteworthy in the local context.

First, VW Group Singapore managing director Olaf Duebel ended his six-year stint here last month.

He has returned to Wolfsburg to lead a new engineering unit that focuses on hybrid and electric cars.

His successor has not been named.

Second, Mr Mark Choong, chairman of Toyota and Hino distributor Borneo Motors, retired yesterday after 30 years in the Inchcape group.

He leaves the firm in the hands of managing director Koh Ching Hong, marketing director Klaus Redomske and finance director David Colwell.

The final bit of news has to do with Proton launching the Exora, its first MPV in its 26-year history.

It is a sombrely styled car powered by a 1.6- litre engine with a four-speed gearbox.

That Proton has lost much ground to fellow national carmaker Perodua on its home turf highlights its fading appeal.

The only appealing thing about the Exora is its $58,000 price, which makes it $11,000 cheaper than something like the Kia Carens MPV.

The Korean car, however, has a higher residual value.

Back home, Proton has recently been trying to sell part of its struggling business to foreign investors.

Perhaps a Middle Eastern emirate will come a-knocking? Fat chance.

christan@sph.com.sg