• Germany's news in English

Volkswagen asks for state guarantees for financial unit

AFP · 9 Dec 2008, 17:09

Published: 09 Dec 2008 17:09 GMT+01:00

Facebook Twitter Google+ reddit

"We have filed two requests," one for the financial services division itself and another for the Volkswagen bank that is a sub-unit of the division, a VW spokesman told AFP.

He declined to give the amount requested and the date the request was made. "It is a question of obtaining public guarantees. It is not a request for recapitalisation," the spokesman said.

VW had said several weeks ago that is was considering such a move after encountering problems with refinancing for its auto credit operations. The German government's bank support plan provides a total of €480 billion ($620 billion) in aid, with the vast majority representing guarantees for loans.

Berlin is also ready to inject cash into troubled German banks in exchange for stakes in them, but relatively few banks have applied for the cash. The three largest German auto manufacturers each own their own banks that offer clients financing, either via credits or leasing programmes.

These activities used to make money for the companies but they have been hit hard by the international financial crisis that had made credit conditions more restrictive, in particular between financial institutions.

The German group BMW has also said it might apply for state aid, and "we are still examining" that possibility, a spokesman told AFP on Tuesday. At rival Daimler, "all options are open," a spokesman for the financial services unit that oversees Mercedes-benz Bank said.

"We do not currently expect to appeal for public funds," but the company did not want to suffer from a competitive disadvantage, he added.

If VW obtained state guarantees, its refinancing costs would be lower than those obtained in the market, the spokesman explained.

For now however, "the group's liquidities are sufficient," and Daimler did not need outside refinancing, he added.

Automakers have become early victims of the global economic slump, and the chief executive of Italian group Fiat, Sergio Marchionne, predicted on Monday that only six would survive worldwide.

"By the time we finish with this in the next 24 months, as far as mass-producers are concerned, we're going to end up with one American house, one German of size, one French-Japanese, maybe with an extension in the US, one in Japan, one in China and one potential European player," Marchionne told the Automotive News Europe.

"The only way for companies to survive is if they make more than 5.5 million cars per year," he added.

Story continues below…

The publication reported that Metzler Bank auto analyst Jürgen Pieper expected VW, Renault-Nissan and Daimler to be among the survivors, but that PSA Peugeot-Citroen, BMW and Fiat would be vulnerable if the downturn worsened.

Marchionne was quoted as saying: "This business is going to be completely different. It cannot continue as it did in the past. Independence in this business is no longer sustainable."

Audi, the high-end line owned by VW, "has been doing better than Mercedes and BMW over the last few years because it benefits from being owned by VW," Pieper said.

This was also a factor behind Porsche's decision to buy VW, the report said.

Facebook Twitter Google+ reddit

Today's headlines
Outrage over ruling on 'brutal' gang rape of teen girl
The now convicted suspects, sitting in court in Hamburg. Photo: DPA.

A 14-year-old girl was gang-raped and left partially clothed and unconscious in freezing temperatures. Now prosecutors are appealing the sentences for the young men found guilty, most of whom will not set foot in jail.

Dozens of Turkish diplomats apply for asylum in Germany
Demonstrators holding a giant Turkish flag protest against the attempted coup in Istanbul in July. Photo: DPA.

Since the failed putsch attempt in Turkey in July, Germany has received 35 asylum applications from people with Turkish diplomatic passports, the Interior Ministry confirmed on Wednesday.

Hertha Berlin fan club criticised for 'anti-gay banner'
Hertha BSC beat FC Cologne 2-1. Photo: DPA

A 50 metre fan banner apparently mocking the idea of gay adoption has overshadowed Hertha BSC's win in the Bundesliga.

Germany stalls Chinese takeover of tech firm Aixtron
Aixtron headquarters in Herzogenrath. Photo: DPA

The German government on Monday said it had withdrawn approval for a Chinese firm to acquire Aixtron, a supplier to the semiconductor industry, amid growing unease over Chinese investment in German companies.

Politicians call for tough sentences for 'killer clowns'
File photo: DPA.

Now that the so-called 'killer clown' craze has spread from the US to Germany, elected officials are drawing a hard line against such "pranks", with some threatening offenders with jail time of up to a year.

Nearly one in ten Germans are severely disabled
Photo: DPA

New figures reveal that 9.3 percent of the German population last year were considered severely disabled.

The Local List
Germany's top 10 most surreal sites to visit
The Upside-Down House, in Mecklenburg–Western Pomerania. Photo: Olaf Meister / Wikimedia Commons

From upside-down houses on Baltic islands to a fairy-tale castle near the Austrian border, Germany is a treasure trove of the extraordinary.

Bavarian critics back Merkel for Chancellor again
Photo: DPA

The Christian Social Union (CSU) have long delayed backing Angela Merkel as their candidate for Chancellor in next year's general election. But now key leaders are supporting her publicly.

Four taken to hospital after hotel toilet bursts into flames
File photo: DPA.

Four guests at a Nuremberg hotel were taken to hospital due to smoke inhalation early Monday morning after a toilet there burst into flames.

Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German towns, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd