When Porsche Tried to Buy VW - The Crazy Story of The Ballsiest Sneak Attack in Car History
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- čas přidán 18. 08. 2023
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Today, a story of epic proportions - the tale of when low volume sports car maker Porsche thought it could really take on the might of VW, and buy the company - without anybody noticing. It all went wrong - so what happened exactly?
#VW #Porsche #stockmarket
Takeover of Volkswagen by Porsche
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The Porsche family pretty much controls the car industry in Germany. They are essentially a royal family. They have ownership of Porsche, VW, Audi, all the other subsidiaries, and have some influence over Mercedes because of the Stuttgart connection. Since Ferdinand Piech, the family hasn't been in direct control of the companies, but we all know that they still pull the strings.
@@fry.master The Quandt family (BMW) where not so kind to people in the past, look them up.
reminds me of a chaebol
Why shouldn't they be?
I wish Koenigsegg had gotten Saab. Imagine their engineering drive in more accessible cars. A sportbrake hybrid with direct drive and manual variable torque converter. The joy to drive that, even if not the greenest super champion.
Ehh what would be the point of that, like halfway between "green" and a fun wasteful enthusiasts car.
Like the Regera, why tf would you want a HyperCar with the driving experience of a CVT transmission 😅
@@Emira_75 Way nicer than CVT I would think. Especially with a car that's not geared for 41p kph but say 180 kph. It works much better in city traffic then,relieves the hybrid side if it's tired die to the city traffic being long or the highway drive b getting short. People call rattling through 8, 9 or even 10 gears with floppy pedals fun. I like the idea of playing with the revs vs the acceleration. I might change my mind after the testdrive. With out haste and with a good hybrid side, the torque converter would be along for the ride most of the time anyway, especially with the shorter final gear it would undoubtedly have, let alone with a torquey diesel engine :)
@@Cloxxkiyeh but a super car is supposed to be a Sunday drive full of excitement, who gives a sh!t about whatever practical bs you're talking about 😅
Gimme emotion and let me row gears
@@Emira_75 I don't give a darn about the CO2 hoax (it's plant food) but I do get a certain kick out of efficiency, even if it means I'm burning some rubber and lapping fast as I can. Long lift and coast like Formula E "races", less my thing.
A really interesting story, and I'd certainly be interested to see more delves into the weird shenanigans of automotive history.
I'd describe short selling this way - it's selling an item you don't own, in the hope that by the time you have to deliver the item the price will have dropped. Come delivery day, you buy the item at the new cheaper price, sell it on at the previously-agreed higher price and pocket the difference between the two. As you say, if by the time you have to fulfil the order the price has actually gone up then you're in a lot of trouble, because you're still obliged to obtain it and deliver it at the originally agreed price.
Emphasis on the "infinite loss" potential of short selling, but the other component is a short seller has to locate the shares to borrow in order to sell short in many jurisdictions, including the USA. (Which is normally facilitated by a brokerage. Crackdowns after events like this at least in theory make it harder to sell short if borrowable shares cannot be located. Unless Porsche itself was permitting its VW shares to be loaned out until the market realized how much it already owned.)
Short selling:
“He who sells what isn’t his’n
Buys them back or goes to prison.”
Well told. The only correction being that a short seller ‘borrows’ shares, not buys them.
I used the term rental as it seemed reasonably close
I remember watching it all play out in the media at the time. Was pretty bonkers.
Great insight. Enjoy this kind of content. Behind the scenes nonsense like SAAB completely ignoring GM when it came to building cars to a budget. I think this is your best kind of content. Always delivered to a high standard. Would be great if you covered the history of the VW Beetle. Cheers
Now that the Porsche vs. VW saga is settled JayEmm, lets talk about: cats...& helmets...
(( i couldnt help but notice - just kidding & Thanks))
In my opinion, this is one of the best and finest (if not the finest) episodes which you have done yet as far as the content and the research you have so obviously put into it, and I have nothing but praises to sing you for how authentic you come across. Keep staying true to yourself!
Jay had the same reaction to "shorting" that I did when I found out about it. When I hear about shorting it reminds me of the EB Games event where a group of investors, who all frequented the same forum board, found out that someone was attempting to short EB Games, so these investors bought up all the EB Games stock, driving the price up and thoroughly spoiling the shorters' plans. Hilarious. Fascinating story - I hope Jay does more videos like this.
I watched I think a BBC programme on it years ago. I thought the biggest problem was because no one was selling the shares they stalled the market and it risked pension funds etc collapsing
I love the way you told this story. Well done. But I want to correct you on one crucial aspect of short selling. You don’t buy the stock you’re shorting. You borrow it against a fee with the obligation to give it back at a specified time. Then you sell it to a third party. Buying it implies ownership and thus no obligation to deliver it back. This distinction is the fundamental part of shorting and the reason it can be an extremely risky endeavor because you are obligated to purchase back the stock you borrowed and sold. Since there is no actual limit to how much a stock price can increase there is no limit to the potential loss you suffer when you have to buy it back to fulfill the borrowing agreement.
Yeah, I used the term "rental" as in my head it made more sense but I think the overall concept was still there - you owed back a share at the end, and if there were none around... chaos!
Great episode man. Having done lots of my own studying on this (I did a report on the failed buyout for a German class in college), you pretty much nailed all the sequence of events, key players, and enough cultural/business context. Thanks for always keeping the content relevant, easily digestible, and of tremendous quality!
Thanks! Glad we got it right
I saw this topic recently "How Porsche Owns Volkswagen and Volkswagen Owns Porsche" plus they both own Audi, and Audi owns both of them. Reeks of white collar crooks.
It's just the result of family clashes ;)
Quite. An alternative intro would have been: A tale of corruption, corruption, corruption and a bit of corruption.
@@cafe405 "1937 and Berlin is a combo of date and location that goes together like peanut butter and Hitler" - Half as Interesting channel.
@@cafe405 There's no corruption
Thanks James. I think Carlos Abarth also deserves a mention as he got Ferdinand Porsche (who was facing criminal charges in France) out of the prison. Without Abarth we likely won’t have Porsche today.
I always thought Porsche did own VW, I guess that came from the Porsche SE technically owning them, despite VW owning >50% of Porsche SE.... this is batshit insane and is another reason why the stock market is stupid imo...
James, I don't know if you're going to read this, but wouldn't it be great if you make another series like this? Some sort of story time, about weird and wonderful stories in the world of motorcars.
when they appear I'll try to tell them - I'm sure there are plenty of other great anecdotes out there
😊I remember working out at the gym and seeing the ticker come across at $964, i said to myself give it a day or two, something looks really dirty here.
Very little more intriguing to the human condition than a good story. Great stuff as always.
Jay, your content is truly special. Watching this while sipping coffee on a relaxed Saturday morning was a perfect pairing. Thank you.
My head is blown.
Thought Porsche had been a VAG group company since the early 80s.
So Porsche the company lost big, but Porsche the family won in the end?
Really enjoy videos like this, really well shot and told. Cheers 😊
Very interesting Jay and great explanation of how it unfolded. Thank you
Great summary, it was amazing the minnow nearly did swallow the whale. Just started reading a book about the Agnelli family and the Fiat empire's complex business history up to the Chrysler era (Mondo Agnelli: Fiat, Chrysler, and the Power of a Dynasty was published 2011). Even the decade or so since that era is quite a tale, perhaps worth you covering with the Ferrari association.
Really well told. A great read which describes this, as well as the emissions scandal is "Faster, Higher, Farther The Volkswagen Scandal" by Jack Ewing
I followed this at the time in both the English language and German media (which tends to be very indulgent towards the domestic auto industry) and I think you got the story pretty much spot on. And you're a great story teller. Excellent stuff.
BMC was taken over by Leyland, despite being less than 10% of the size
Liked it. More please.
Well James you certainly left my head spinning on this one. How any normal person can understand big finance is beyond me.
Absolutely brilliant video - would love to see more like this!
Great video, thank you!
This was a great video! I do hope you do more like it.
This is a really really good video about all this stuff, actually learned a bunch about both
I quite enjoyed this. Nicely done.
Short sellers are vital..they sniff out shenanigans & frauds before anyone 👍
They are the canary in the mine.
I've heard of this before, and I think you have explained it quite well. I'm looking forward to seeing another declassified episode some time as well.
Very Interesting James thanks 👍
A very good episode James.
Fascinating Analysis!!!
Fascinating James…….🤔
Feel free to make more content along these lines…… I could never stick history at school, but find myself devouring a myriad of different sources……. Mainly motoring, motorcycling and mechanised warfare……… with a smattering of boating 🥳
I hope VAG continue, being a Skoda daily driver (the epic Yeti) and finally, in my 60th year, a 911….. sharing the same age…….
You and others like you are the reason I have a bloody great big TV screen sitting idle, headphones on and an iPad on my lap
Carry on 🇬🇧🏁
That was so interesting.
Best into ever !! :)
Porsche has been described as "a hedge fund that just happens to make sports cars on the side"
There's a lot of big businesses these days that are financial organisations that happen to make some hardware. Businesses have been driven to doing business this way because, if they don't, someone else will take advantage of their naivety, costs will rise, profits fall.
Where some of them go wrong is to become loans businesses lending money to their customers to buy their products. The temptation is to be too generous with the lending, because that boost sales in the short term, but risks a bad-debt headache later. It turns your own sales force into your worst enemy, because they're going to get bonuses for helping customers lie about their financial ability to pay off the loan.
@@abarratt8869 And being slippery white collar criminals hiding behind mountains of faceless gobbledygook paperwork helps the bottom line.
Porsche SE is a different legal entity to Porsche AG.
@@JohnFromAccounting Yea yea yea. To the white collar 'money mover' I'm sure it is. 🙄
Good video, thanks. Was this up a day or 2 ago?
Jay ❤your awesomeness fact be known!!
Wasn't this posted yesterday?
Yes I had to make a couple of corrections
And it's just that simple. Also, luv yer "office"....
Hi Jayemm, surely Porsche was saved in 1996 by the launch of the Boxster 986 long before the Cayenne appeared in 2003. Another excellent and educational presentation. Not keen on SUV’s or badge engineering. Kind regards, PhillipJ
And Mercedes continues to keep a low profile in all this... hummmm
I'm not sure I'd say the Maus was a magnificent piece of engineering, by all accounts it was pretty terrible
You forgot the bit about the short seller who walked in front of a train, briefly.
I seem to recall that Porsche had bought 25% of VW. It was when it announced it also had bought buy options on another 50% that everyone realised the problem.
Short selling is buying low and selling high, except the timing is reversed:
You borrow the shares and sell high first, then buy low to replace the shares you borrowed.
The problem arises if you sell them first and then the price doesn’t go down but goes up instead. Then you’ll have to come up with extra money to buy the shares you need to return.
I remember BBC or CH4 doing a doc on this. Absolutely wild. The VW stock touched 1000eur a share!
As yesterdays. TY J anyways 🙏🙏
Great story! Love how you narrate events like this❤
it does make me more than a little annoyed that people can do such things and get 50 million . if every time i effed around , i "found out" this way , well... my lifetime of bad choices and spending far too much on messing around with cars would make me a much wealthier man. and i think that's how we all ended up in this comments section.
Congrats on 300K subs! I'm liking the new setup for your talking head videos. Better than your old PC desk for sure. Still, there's no way to make finance, share, stocks, short, shhzzzzzz I'm asleep already.
Yeah why was it pulled yesterday
Great content - a fascinating tale. Always wondered about the ins and outs of the Porsche / Volkswagen relationship. Would happily watch more stories like these, keep up the good work.
I like Jay Emm, and I informed him via email that he missed a few details already.
I don't intend to steal from his audience, but there's a bit more to this story :)
There's a 1 hour 45 minute documentary that goes a lot deeper and uncovers some very interesting details.
It's not in english tho.
It would seem that none of this negatively affected their working relationship. My 981 Boxster was assembled in a German VW factory - as opposed to where they'd been assembled previously...in Finland - where my 987 was assembled.
So, who pocketed the most cash. VW/Porsche? Or the other shareholders? And, was this actually the family's real motivation from the start?
Deja vu
Another re-upload? Swear I got a notification for this with a David vs Goliath reference in the title yesterday.
yeah its a reupload, ïwatched it the other day
He said he took it down to edit it.
@@Low760 what was wrong with the original? What has changed? I wondered if he'd had a shirty email from Porsche/VAG lawyers...
@@richardharrold9736 he said he made a mistake with a fact check his community channel post
Sometimes he does a reupload if he's missed something/bad edit/not up to his standards
Can you (Jay) or anyone else elaborate on how the family is allowed to own the company but not control it? What’s the deal with that?
Great video!
Not sure if he's referring to this or not, but in the early 70s Porsche felt like the company was growing too big to remain a "family business" and things were gonna turn ugly if family members start fighting over who's pulling the strings. The agreement was that the Porsche family would not run the company and instead they'll let an outsider do it, first one being Ernst Fuhrmann who worked in Porsche's engine department at the time. He will be replaced by Peter Schutz who saved the 911, after him you had a brief period of instability and then we get to Wiedeking.
Yup that
Re-reading my original reply I realized I never mentioned Piech while the video does.
Piech was originally running the Porsche Racing program, his 917 project brought Porsche its first Le Mans victory and after agreeing not to run the company anymore left and started his own engineering services firm. One of his clients ended up being Mercedes who needed a diesel engine. That project ended up being the 5-cylinder diesel we all know and love.
But more interestingly once Piech moved to Audi that diesel 5-cylinder was reworked to be petrol. I'm not sure is this what begun the tradition at VW that petrol engines are based on diesel units or not but would not surprise me. From Audi he moved into VW when VW was for all intends and purposes closing it's doors, somehow reversed that in just a few months and then went on a spree of trying to outdo everyone.
Dude, how many cats do you own??
Nice video.
I hope the facts are correct, I really can't say. I just thought VW owned Porsche but it was the Porsche family that owned VW.
Good analysis but the platform strategy did not oringinate with Ferdinand Piech, I was an automotive analyst at the time and met Piech several times. juan Ignacio Lopez a Gm employee poached by Piech was probably the first to capitalise on the strategy and bought it with him. Andes it to VW certainly exploited it to the full. Soon though they were all doing it.
You're a very good storyteller!
He missed the most interesting part
@@Random-nf7qb which is?
@@richardharrold9736 wanna watch a 1 hour and 45 minute documentary, or do you want a straight answer?
Presonally, the documentary is worth it to me
Ah yes. The VW Beetle. James May's favorite car ever.
I enjoy the characters and banter of the trio, but don't pay any attention to their opinions on cars - especially May's. He likes Teslas and Hondas...
Beetles are fantastic
whats the helmets for??
They protect your head
ahh good choice...yes but are you a biker also ? i think yes
a 50cc wow what a beast
It was the 996's fault.
Did you really reupload a corrected version because of the definition of short selling being wrong?
Now THAT is commitment to a high journalistic standard! Seeing the drama around Linus Tech Tips and their channel (valued at 100M) being to cheap to correct errors in their content, this is especially commendable!
It was to correct an error on the history of Ferdinand Porsche and his exact role in some WWII stuff, and later to explain the Porsche IPO better
@@JayEmmOnCars Still nice to see your commitment to quality, and that you listen to feedback. This is sadly not the norm, especially in this day and age, and greatly appreciated.
I cannot take my eyes of the helmets, I wonder what bikes you have??
You’ve uploaded the same video already. Suppose that makes it twice as interesting. 🤣
Reupload?
My future self thanks you in advance, on the value of this golden era of cars, brought to us by how things were so screwed up back then, and infinitely worse today, I can't say E without the agenda Vomit... Now where is my hover board?
Sounds like those two familys wantedcto push every one eles like the part of germany out so they would own it all
First (for the first time actually)
That story is just gold. I think everyone here in Germany knows it ^^
Sorry, I think I beat you to it...
@@richardharrold9736 :(
Of only Ferdinand had been an WOMD fetishist, he'd become a much respected American citizen, be he was a lowly car designer...
Freaking dolphin lasers.....
Pretty ballsy move by Porsche but the VW machine is too big and too exposed to market forces for any move like this to be a sure thing, good try though 😅
Piech had a romantic relationship with the wife of Wolfgang Porsche's brother. (they are cousins)
Since then the Piech and Porsche families split.
@@Random-nf7qb it would save time to list the women in Germany that Piech wasn't shagging! He had a huge Messiah complex and believed he had a moral duty to spread, reproduce and perpetuate his genes as widely as possible...
@@Random-nf7qb game of thrones drama much 😅
@@sydwellsithole4433 yeah
Want a link to a 1 hour 45 minute documentary on the topic? English subs, but otherwise in russian.
I thought they were the same company, Like toyota and Lexus.
Fascinating story, superbly told!
Love the intro!
Nice story, still didn't pronounce Porsche correctly at the end there..
So what do we think of the ticker P911 going forward? It’s up 23,76% since it’s launch in oct 22 but has softened quite a bit lately.
It's pronounced Pórsché. Both the o and the are short...
Another curious story is how electric tech startup Rimac from Croatia became a very sought after consultant, especially after dieselgate I guess, and Porsche (my guess) had to take significant investments just to skip the waiting list for Rimac to help them with electricification and production projects. Rimac on a side project developed their second hypercar Nevera. Bugatti had been a pretty but hefty anchor on VW's ankle and tricked (begged) Rimac to take care of it. Rimac absorbed Bugatti and Porsche for VW took a larger interest in the merged company. Now a Croatian self made engineer/entrepreneur barely starting his 30s finds himself CEO of Bugatti, a rival car brand that he never even tried to take over, merely offered a fun electric alterntive to the products Bugatti offers: luxury 2-seater hypercars. and Mate Rimac isn't even the typical totalitarian leader ruling by fear, he seems to actually be loved by the people he works with.
Electric motors and circuitry have been well established tech. How does a scrappy Croatian (perhaps a Nikola Tesla having born kind of nearby, but with people skills and financial bravoury) lead the automotive world in building motors, circuitry and intergration? He kept a relatively low profile in terms of taking credit for products brought to market by clients, but was very accessibly publicly with his modest personality. I was in an automotive startup looking to hire them (there was not better) for consultancy, many years ago already, and they just said "we've booked for years and years to come, can't possible grow any faster, hire and train people, to take on any more work".
Mate Rimac is a curious young man. Lived in Germany, so speaks the language. Speaks English very eloquently. Made his first real money making an infinity gauntlet for physically impaired people. Repaired a broken BMW by putting in an electric motor and battery (pre-existing parts), and breaking performance records with the car. Became an intern for engineering geniuses Koenigsegg and ended up providing them with the battery for the Regera which again holds the 0-400-0 record with their 2015 car on modern tyres and driven on a better runway. A RWD car, no less. And how he's been "given" Bugatti. Not a Bugatti, the whole company, the pinnacle of petrolhead excellence and style. And there don't even seem to be ANY people with unflattering words for the man. Highly unusual.
I can't wait for the first Bugatti car to come out under the new leadership. Groundwork was done under VW rule (it did bring amazing Veyron and Chiron), but what can they accomplish with supervision and full support of the exceedingly esperienced Rimac crew? I kind of expect them to tone down the W16 to a great sounding V10 or V12, but in a way that uses less fuel that it "should" for the sound it makes. Of course a trick integrated hybrid system. Of course more power in total over previous models. Just a good sounding smaller V12 with a good hybrid system would go a long wait, but I expect the unexpected. Koenigsegg gave me that thrice with the same upcoming car, the Gemera. Direct drive rear engine FWD plus some rear e-motors, huh? Genius. But they scratched that, replaced 3 e-motors with one and added clutches to make it fully variable AWD in any mode, fuel and/or electrons. I expect Bugatti Rimac to come up with something clever and eloquent. But can they keep it under 2.5 tons, let alone 2.0? The W16 is horrible for mileage, even when cruising. A V12 than can become a V6 or even V4 disconnecting from the rest would make it exceedingly efficient on any distance, for a hypercar, even when the battery is empty. I imagine that when the foot gets pinned, first 1000 hp of hybrid kicks you in the back as a V8 seems to roar into life. The revs line up and a clutch is closed to make it a screaming V12.
It was indeed a veeeeery murky episode. Certainly worth telling!
Another thing I remember is that it resulted in a change in German law. This kind of sneaky stake building was, at the time, basically illegal in all Western economies except Germany (appropriate accent: "We have very honest businessmen"). It could have happened only in Germany.
The affair showed up Germany of the time as, essentially, a bad and risky place in which to do business, and so they pretty rapidly introduced stronger holdings disclosure laws.
So really Porsche owns VW ?
No matter what happens in the market, eg a country shooting itself in the foot with Brexit, the rich will make money.
Im sorry but I can’t watch it this episode. Every single time you mainstay the name Porsche. It is not porsh it’s Porsche. You made Germans angry.
Another one with 2 cameras and a poor edit. Well one cam out of focus I guess.
So not going for Imax release then?
Was a great video so shut up
Check out the Overstock story if interested