Firms aim to divide and conquer

VW Group is considering listing Porsche on stock market, confirming an industry trend

-  NICK GIBBS

News that the Volkswagen Group is pulling the levers to spin off the highly profitable Porsche company makes it the most high-profile example in recent months of a growing trend to divide up automotive groups.

Why manufacturers and their suppliers are doing this boils down to two reasons: unlocking value and better preparing themselves for the shift to electric away from internal combustion engines.

The decision to list 25% of Porsche on the stock market is a good illustration of the first reason. Porsche has consistently been the Volkswagen Group’s most profitable arm in recent years, and therefore a separate listing could value it at as much as €90 billion (£75bn) – not far off the €116bn (£97bn) value of the entire Volkswagen Group, as per its current share price.

The Volkswagen Group would then pocket up to €11bn (£9bn) – a nice buffer against future disruption.

“Volkswagen is using the IPO [initial public offering] to effectively raise capital,” noted investment bank Jefferies.

The split will also give more freedom to Porsche, which has long chafed at having to share platforms, even with Audi.

The second reason was cited by Ford when it announced last Wednesday that it was splitting its car business into two separate divisions, one for EVs and one for ICE cars.

The idea is that the EV division – Ford Model E – will harness the strengths more associated with start-up companies, while the ICE division – Ford Blue – will attack costs to better extract profit from dwindling ICE sales.