Как Porsche и VW ОБМАНУЛИ весь МИР. Картавые Истории

The investors have been suing Porsche for 1.8 billion euro. The headquarters of the Porsche sports cars, and private residencies of the former company top managers were searched yesterday by the Stuttgart prosecutor's office. The ex-president Wendelin Wiedeking and his assistant and former CFO Holger Härter have been accused of machinations with VW shares and disclosure of inside information. The ex-president of Porsche is accused Of machinations with VW. The headquarters of the Porsche sports cars, and private residencies of the former company top managers were searched yesterday by the Stuttgart prosecutor's office. The Porsche CEO resigns. Autoprogmat. Selection of

Used Cars Hi! Here's the question. What is the car company except cars? Have you ever thought about it? Yes, the company has employees, manufacturing, warehouses, counterparties To supplies and sales, logistics, and so on and so forth. But what if I tell you to remember the stock market? Everyone is hearing now about Tesla shares, how we had to buy them in 2017, and then we'd be happy till the day we die. Not only Tesla has stocks. Who's listed on stock exchange? Honda, BMW, Daimler, Toyota, Ford, General Motors, Nissan, Fiat Chrysler, any other large car manufacturer. What

do you imagine when you hear the words "stock market"? Perhaps this film, The Wolf of Wall Street, a bunch of guys who try to outvoice each other to pull their profit, constant staring at diagrams and mystical insiders who obtain the secret of information, and whoever obtains the secret of information could become rich. And everyone likes to stare at diagrams, and make some assumptions, of course. I like it very much. And if we see such a stock diagram of some company, what could we tell about it? The company Is okay and they're doing everything right. Because

we see those stocks growing. By the way, these are Apple stocks. And if we see such a diagram, then something is obviously not right. These are shares of Magnit from 2014. But what if I show you a thing like this? Now we have a bunch of questions! WTF is it, really? Something like that couldn't be real. And if it is, that means someone made a fortune, and some other one lost it. Anyway, something interesting happened. Do you know what it is? This is a diagram of VW stock value. And this dot is October 2008. Today,

I have something to tell you. Today, we will find out why there are national acts written for VW specifically; how influential families control car companies; why Porsche and VW became rivals at some point of time; And what Toyota has to do with the might of Porsche; how could happen that Porsche being the most profitable car company of the world has been taken over by VW ignominiously; and who stands behind the most bold and dramatic event on the stock market among the car companies. The Brilliant Fraud of the Century. How Porsche and VW Fooled the Whole

World. And we begin with another story. Everything's okay. Right. We're pleased with the car. Just minor defects. We're ready to pay 2 million. Should we sign the deal? No, that's no deal. I took the car in for service the last week, there are new pads, wipers, fresh oil. That's a no. 2.3 is the start price. I read on the Internet. But this is... This is a downright standard situation when you buy Or sell a used car. The seller hikes the price too much because they're out of the market context and overestimate their inputs. And the

buyer doesn't follow the prices, that's why they don't know the price of the car. Exactly for those situations, Avito has a great tool named estimated cost. The analytics became deeper. The search on Avito allows you to compare the prices by a lot of criteria: the number of owners, The usage of the vehicle, the number of traffic accidents and Autoteka records, and other criteria. And after that, the service shows the fair price for the concrete instance based on loss and gain. And what's important, it works absolutely independently. And even our specialists from Autopragmat think of it

as the same professional tool as the Autoteka records. Because the precise estimation of the value from Avito Can be a good argument while bargaining with the seller. For example, BMW X3 2017. If we look on Avito, we see the mark "great price". As for gain, it had only one owner. And it means you can ask a particular person all the questions about condition of the car and its operation. And they answer you for sure because no-one drove this car except them. Another gain is that the car is of one of the last years of manufacture.

This car looks in general cool enough. We have only one score in losses: its mileage is more than 60% of comparables. But this problem isn't so horrible. You can buy this car. Follow the link in bio, download the Avito app, and use your new tip while choosing the car. And if you want to sell your car, you can come up trumps and estimate its value beforehand. There are no such cars with the display. Wait! What are you discussing here? Avito says, it's 2 million rubles. You can take your deal, you can take your pen, and

that's all. But I will take my carpets! One. No, two! The front one and the rear one. You can take the one you trampled. The other goes to the client. And the pedal? We regained the pedal. If you just google some key words, like VW, stock values, 2008, something like that, then you stumble on several legal cases about the stock market manipulation, stock value manipulation and fraud. There will be not one case, but a few. And as for accused, there are two people. Wendelin Wiedeking, the head of Porsche 2008, 2009, and Holger Härter, his assistant

and CFO. Wait a minute, dyed guy! We're talking About Volkswagen. Why do you start with the head of Porsche and its CFO? There will be no such question at the end of this video. Let us dig. Chapter 1. The Golden Boy of Porsche Originally, the great and legendary Porsche is a consulting agency for design and engineering solutions for car manufacturing founded by this guy - Ferdinand Porsche. They just worked with other manufacturers and told them what Was better to do. They didn't start to make their own cars right away. But we won't dig up the

history of Porsche, not today. Another time, perhaps. For example, in the documentary about the German car industry. And today we are interested in some period of time starting since the '90s. Porsche dragged itself into the '90s. There was a global crisis everywhere. But on top of that, Porsche had some internal crisis. The company felt really bad. Yes, Porsche was well-known by that time. The world knew it to be a manufacturer making those magnificent, legendary, and luxurious sports cars. Well, that's what fans thought. The rest of the car world considered Porsche to be an overestimated and

constantly breaking piece of steel. It was impossible to drive it. And it was long before macho guys fancied buying dead turbo Cayenne. And the further we went, the more people were sure the truth wasn't with fans. Fans can be right in rare occasions, actually. Well, except for Audi Quattro fans, of course. They're alright. The simplest way to understand the company situation in one move during a certain time period is to look at the sales volume. As we can see, in 1986, they sold 52,000 of magnificent and legendary cars. And in 1993, this magnificent legend was

sold in the issue of just 14,000 copies. The magnificent and legendary fall. During 7 years, the sales volume declined almost by 75%. It was as if you had 6'' in your doodle, and then you woke up and found it to be 1.5". That hurts. This video draws closer to 10 minutes, and I already made an analogy with doodles. I'm on schedule. What about the USA market? The company had to leave it. I remind you, the USA had the largest car market at that time, and leaving it was self-defeating for every car company. Especially, when we

talk about premium segment. It goes without saying that Porsche was very close to bankruptcy. The financial accounting was creaking around the seams. The company was horribly inefficient inside. And their produce presented itself as breaking and very expensive junk. Although, as is quite common, the company wrote it off for the crisis, the American economic plunge, the growth of popularity of damned Japanese cars, and so on. Their management was perfect, of course. And in this brilliant and joyful moment, they make Wendelin Wiedeking the head of the company. And this man had been working as production director a

couple years before. The task was clear, but God knows how accomplishable: to save the company from collapse. Before taking the post, Wiedeking insisted on one certain contract clause: he would get 1% of yearly income of the company. If that yearly income should be anyway. And in 1993 the company was losing 150 million dollars a year. And very few people believed the independence of Porsche could be saved. That's why they could approve any terms. 150 million a year is 2.8 million a week, and 412 thousand every day. If we talk the modern rate, it's almost 30

million rubles. I know I can't compare such things directly, but I'm doing it so that you could understand the scale of the ass the Porsche had over their heads. When such party goes on, everyone can Insist on 1% in their contract if the company were successfully saved. Not everyone could really save the company. One of the first Wendelin's decisions on the new post was inviting the experts from Shingijutsu Consulting. While the world was mumbling that the Japanese are narrow-eyed faggots, Wendelin decided not to whine, but to adopt their technologies. Vending machines with used ladies underwear

were just great; everything starts working better if you add some panties to it. And if you bring hentai to the production line... There is such a book. The Toyota Way. It's not hentai, don't you worry. 14 Management Principles from the World's Greatest Manufacturer. The author is Jeffrey K. Liker. The book describes TPS, Toyota Production System. If you are a manufacturer or a manager, I highly recommend to read it. It's boring for an average person, but a very interesting theme for focused Specialists. That is my house book. The TPS was invented by this man. Taiichi Ohno.

This system was invented in the '50s and presents the essence of principles of lean management, the kaizen concept, the jidoka principles, and other rules Toyota implemented in manufacturing. Besides implementing all those principles in Toyota, the creators had a mission to promote their system around the whole world. In a manner of speaking, the official dealers Of the TPS kaizen and lean management were exactly those fellows from the Shingijutsu Consulting. You could order them to come to your factory, they involved in all the processes, they made plans of remaking all and everything, and they helped to bring

in those new procedures by their technologies. Wendelin did just like that. And I think, he borrowed a couple of hentai magazines from them. By the way, this is the official site of those dudes. It's fucked up to a fault, but strictly speaking, They don't need it at all. Because everyone who needs them, knows about them anyway. And everything that doesn't affect the results isn't necessary. There is the proud Porsche logo in their official cases. After inspecting the Porsche manufacturing, the founder of Shingijutsu, Yoshiki Iwata, was surprised in a Japanese way. Mildly speaking. Here is his

quote: "It was appalling. ‘Where is the car factory,’ I asked myself. ‘It looks like a mover's warehouse!’ And there were no workers, just apes clambering up and down shelves.” And it's no racism, I must notice. Just an Asian guy says that pureblood Aryans are apes. Those guys turned up their sleeves and began to rebuild the company from scratch. The reorganization took 2 years and a shitload of nerves to teach people to work in a different way, to organize the work with contractors and suppliers, and to remake absolutely every process. Remaking anything is always a drag,

and it's more complicated than making from the start. Especially, when the company is large. But distinct changes were not slow in coming. Here you have dried numbers from the original New York Times story about it. Everything becomes clear if you read them. Manufacturing area downsized by 32.8%. Before: 765 sq. yards. After: 514 sq. yards. Two: the distance cars travel on assembly line reduced by 73.8%. Before: 455 yards. After: 119 yards. Three: manufacturing flaws per car Reduced by half. Inventory levels downsized by 81.2%. Before: 8,490 large parts. After: 1,600 large parts. Manufacturing time reduced by 40%.

Before: 120 hours. After: 72 hours. And management for car manufacturing reduced by 31%. How do you feel about that, unions? By the way, making people work in a new way was one of the tasks of Shingijutsu. Because no one wanted to work in a new way and efficiently. Lost revenues, you say? We know nothing. Our payday is on 30th. We have only gainings. Your expenses aren't right, that's all. This middle of the '90s was the time period when Porsche approached to their car manufacturing scientifically. Daniel Jones, the Professor of the Cardiff Business School, said in

the same article: "The traditional craftsmanship for which Germany became famous was filing and fitting parts so that they fit perfectly. But that was wasted time. The parts should have been made right the first time. So the new craftsmanship is the craftsmanship of thinking up clever ways of making things simpler and easier to assemble. It is the craft of creating an uninterrupted flow of manufacturing." And really, the new manufacturing process of Porsche implemented with consultants by Toyota technologies and Wendelin's decision, started to bring results very quickly. Porsche became a very efficient and precise Company that was

ready to show the rest of the world how it's done. How money should be made. But first, we will make some money. Not okay. Now it's okay. Now it's safe. the right way to write scripts After THIS METHOD, he wrote a SCRIPT in 1 HOUR. You should SIMPLY... If you watched our documentary about car security systems carefully, you should remember how The society accepted seat belts. Before the moment of mandatory adoption of that essential element, people had experienced some problems. The same thing with hygiene: only the quarantine, lockdown and pandemic convinced people that hygiene is

important, and it's necessary to wash your hands. Because some nasty things can be on them. Today, we're living in a new digital reality, and the same rules work with our computers, Gadgets and every piece of tech. And so that your data, your money, and your passwords stay safe, you should think beforehand. Avast Premium Security is a complex antivirus that will keep you safe and comfortable online. It efficiently fights any kind of malwares. The most important is, that it proves out with crash tests by independent labs. Don't you think that viruses and trojans have left somewhere

far away in 2008. There's a lot of various programs and sites that hunt down your data, and try to steal your money. There's nothing funny about that. In this case, antivirus is a seat belt: it doesn't bother you in everyday life, but it can save you in a critical situation. Also, this antivirus can block fishing and false sites, and protect your Wi-Fi, your webcam, and most importantly, your passwords and your card numbers saved in your browser. There are many things saved in your browser, guys. You should see that! I saw it, but you didn't. Of

course, Avast Premium Security can run with Windows, with Mac and with Android. And naturally, the download link is down here in bio. And don't forget to wipe your browser history. Chapter 2. Boxster, Cayenne and Money A hell lot of money. It goes without saying, that's good to produce old models more efficiently. But it won't lead you to world dominance. Obviously, Porsche needed new models. At that moment, Porsche's best seller was, of course, 911. When Wendelin took his post, there was 993 body on the line. The fourth generation. Fans consider it to be the most unfortunate

body of 911, and I agree this time. Just look at it. It looks as if it's trying to say, "Please, don't hurt me!" Like all the Porsche at that time. The fun thing was that this was still a car from 1964. Yes, reworked and with other motors, but the difference between 993 body and the original 901 one was the same like VAZ-10 was different from Priora. Wow, what will it be after such comparisons in Porsche club? Now I'll have to explain those guys in chat what the word "trolling" means. They threw me away. You should

know, I don't want to badmouth the classical 911s, they are magnificent! I won't argue, I would like to buy a dozen myself. But this magnificence of 1964 Was too hard to sell in 1995. It had to end. So, that way or another, they began to design a completely new car that wouldn't have to do anything with all former bodies. And that was not design of one particular car, but that of the whole platform. Of course, with all new principles Porsche got from working with Toyota. The main blasphemous move towards the fans was Wendelin's decision to

make A small and cheap roadster on the 911 platform. He stepped on sacredness of the 911, and at the same time, he stepped on testicles of all the fans. And he gave up on air cooling, that devil. Yes, you got it right. The 911 from the late '80s and early '90s was still with air cooling. That wasn't cool. Perhaps, I can't understand why giving up the air cooling in favor of fluid cooling was a move against foundations and traditions of the company. Although, when Wendelin became the head, the process of this car's design went on,

technically. But it's clear that, with introduction of Toyota's gizmos, Wendelin changed the process and the result very much. You can say that he was the hero of this occasion. In 1996, with howling of the fans, this car appears: Porsche Boxster with 986 body. This is the first designed Porsche roadster since the 550 Spyder from 1953. There is not so Many differences between it and the future 911 in 996 body. The motor was inside the base. A little different mount, another motor (not so large). And a bit of differences in the body. Everything else was the

same. These are the same cars by the platform, and even motors that were different in volume and power, they were practically siblings. They were much cheaper in design rather than being designed singularly. Of course, the flaming butthurt of the fans provided for a couple of white nights in Stuttgart. But no one gave a damn about it. Fans are such fellas that could experience butthurt in every case, and no one pays attention to them. Remember BMW fans who saw BMW 5 series E60 for the first time. And what do they think about it now? The most

important thing for us: do you remember me showing you the sales diagram since 1986 till 1993? Let's go further. 1993-1996, there was reorganization, nothing changed. But since 1997, new models began to work for the company. In 1997, Porsche sales were almost twice as high as in 1996, and they began to grow very quickly. But there were only 2 cars in the product line, 911 and Boxster. And there was nothing else. The new 911 was a better seller than the former generation, and the Boxster practically kept up with it with its volume of sales. I repeat,

everyone didn't give a damn about opinions of the fans. But Porsche didn't have it enough. At the same time, Wiedeking went to VW and said he wanted to create a car that could protect the company from uncontrolled jumps of the sports cars market; a car that everyone would always need; an off-roader that would be driven like nothing else in its class; the real Porsche by its behavior. And so that 10 years later, some respectable men in pointy shoes could drive it to the market. He asked VW for help in financing his expensive project, and their

production assets in Bratislava. In exchange, VW and Audi got chassis for their cars designed by Porsche. Porsche did make their chassis like no one else. The head of VW estimated figures, scratched his head, said jawohl, and the design was on. By the way, Porsche and Volkswagen were independent from one another, and it wasn't necessary at that time to make a car together. Before VW, Porsche negotiated with Mercedes to participate in ML production. But they didn't agree at that time. But if Cayenne was Mercedes, too, all the Caucasus could burst from excitement. The project was led

by this guy, Klaus-Gerhard Wolpert. More than 300 engineers took part in the design, and all of them were sitting in Porsche headquarters in Weissach. That's an ideal name for Cayenne designing - Weissach. The name of the project was PL71. As we know today, this is a common platform of Volkswagen Touareg, Audi Q7 and Porsche Cayenne with 955 body. The base of Cayenne and Touareg is the same, and it's a bit stretched for Audi for three row of seats. The production began in 2002, and Cayenne appeared on the roads in 2003. And if you say that

the fans were surprised to see that the looks of 911 were pulled on Touareg, you say nothing. Even I, Being in Novgorod in 2003, caught this moment, and one could hear Porsche fans howling around the globe. Somewhere in Germany What are those sounds, Barrymore? Those are Porsche fans howling on the marches how hideous the first Cayenne is, sir. They haven't seen that Rolls-Royce from Davidich yet. But in spite of all the critics descended on Porsche and Wiedeking personally, Cayenne began to sell. Rather, people declared open season for it. In a year after the start of

the sales, in 2004, the sales volume of Cayenne would be the same as the sales of 911 and Boxster together. Actually, Wiedeking released Cayenne just in time. Besides that he wanted to release a sale stable model, he got into a boom of crossovers and off-roaders in the USA. In the early 21th century, the Americans went nuts for large family cars and bought everything they could find. And then, that trend reached the rest of the world. For clarity: here is a picture of traffic in '90s. And here is the current traffic. As you can see, there

are much more crossovers; and Cayenne was the king of that party and remains to be the king. Just look at the sales diagram and enjoy. In 2007, for the first time of its life, Porsche will cross the mark in 100,000 of cars sold per year. Yes, in 2005, there was Cayman, renewed Boxster, new 911 in 997 body, but it doesn't matter. Since 2003 and up till now, the powerhouse of the sales and the main car that brings money to Porsche is Cayenne. There is one important thing to understand for our perspective: since 2003, Cayenne and

Touareg are put together on VW factory in Bratislava. In 2005, they put Audi Q7 in there. The line assembly is organized in that way, so it's not really important what are the options of your car and what material the dashboard would be made of: A leather one like in Cayenne, or a usual one like in Touareg. Whatever. Their prime costs wouldn't really differ. At the core, Touareg and Cayenne are one and the same, technically speaking. So the prime cost of a single car was practically the same, but the final price for the customer - not.

Even now the cost of a new Touareg begins with 4.5 million, and the cost of a Cayenne - with 7.5 million. Yes, there are different motors and Specifications, yes, but it doesn't matter. You can't increase the price for 66%. As expected, the price of a Porsche always comes with the margin of a premium brand. It's hardly a surprise for anyone. And the most important thing, people were ready to pay. Do you remember financial state of Porsche when Wiedeking came in 1993? Those smart cookies who watch carefully remember that the company was losing 150 million dollars

a year. A crappy situation. And now let's look at this united diagram of sales and EBIT rate. That's not what you think right now, this is not a Russian cuss word. Don't faint, I'll explain everything. Even if you don't understand the meaning of the term, you can see that something began to become bigger by Porsche. And even faster than the sales volume. Very plainly speaking, Porsche's margin began to grow. The EBIT rate is the profit of the company before Tax deductions and percents. Investors like that rate very much when inspecting the company's activity. Roughly said,

in our situation that means that Porsche began to make more money per a unit of their products. And if you look at 2002, where the EBIT rate is approximately 17%, the heads of AvtoVAZ can catch a heart attack because it's a very high rate for serial car production. In the modern world, For example, BMW, one of the most high-lucrative concerns of the world, its EBIT is 9.5-10% per year. Let's speak more clear. In 1993, the amount of business was 1.7 billion dollars. And then dead loss was 150 million dollars. As you can see, the EBIT

rate was negative. And in 2005, the amount of business 10.3 billion dollars, And the net profit of the company was 1.9 billion. That's not a lot of money. That a hell of a lot of money. And another billion of dollars on top. In the middle of the 2000s, Porsche becomes the most profitable car company in the world. No car manufacturer gained so much with every invested dollar and with one produced car. It's only natural that such high profits Made the heads of Porsche lose some marbles. Here's the video where Wendelin speaks before Porsche's head management

in a golden cage symbolizing the chicken with golden eggs. By the way, do you remember the line in Wendelin's contract, with 1% of clean profit? No one canceled it. In 2005 only, Porsche paid their main employee 20 million dollars. He gained 1.5 mil per month, and at the same time, He become the most highly-paid top-manager in car industry. As of today, of course, we know people who gain more, but in the 2000s no one gained so much money in car industry as Wendelin. But they had to move on. Like Wendelin himself said during the Cayenne

launch, "We should think of future. What would happen with the company in 2005-2010, what will happen next? This is my job because the company Should grow. If the company doesn't evolve, it won't survive. And I think, if you go around in circles, in means the beginning of the end." And yes, that was a problem because every company should see for some years to come, and for dozens of years to come is even better. And don't you forget who we're dealing with. We're dealing with a man who spent 9 years to transform the bankrupt company in

the most lucrative company in the car world. They wanted a new breakthrough, they wanted to go to space again. And in 2003, just after the Cayenne launch, as if it was some cocaine bout, an idea appears. Why don't we seize VW? Chapter 3. Colossus on clay feet On the one part, this idea was really insane. On the other part, it was understandable and logical. How so? Like that. First, let's realize the clearer thing: why is this idea completely insane? Not far to seek, comparing Companies is enough, and you realize everything. Although Porsche is over 999

profitable, this is a small family company that in 2003-2004 produced 70-80 thousand cars. And Volkswagen is a giant factory and produces millions of cars per year. By the way, about comparisons Who are you, merry fella? What do you want from me? Who bit you? Who's the person that bit you, apple? Mi, Mi. Where's Xiao? Why are you a top for those money? 1xСortex-X1 @2.9 gc + 3xCortex-A78... How much do I need my kidney? Why is Safari a browser? When it's a devil's field. I spent hundreds of hours gathering all the information about those devices in

order to get a real bargain. I studied all the characteristics, I compared all the prices, I wasted a lot of time, and then I realized: E-katalog has all of it. Abundance of things leads to necessity to compare them, to choose the thing that is most fitting you. If such question rises every day with clothes you want to go out, then, in case of technologies, this problem is very acute. Without any guide, technical education and 5 years in IT, there's not much to be gained. Especially when... 1xСortex-X1 @2.9 gc + 3x... Well, you got it. And

this could be a real problem if you didn't hear About E-katalog. E-katalog allows you to choose thousands of goods of hundreds of categories that would fit you perfectly. For example, you need a phone with a cool camera. We open E-katalog, choose the section with smartphones and choose them in detailed filter. That's all! You see the selection of phones with the coolest cameras in different price segments. Furthermore, you can choose some other parameters In the filter: firm, presence of scanner, SID, even the thickness of the device. As you receive the right selection, you can comfortably compare

all the items with help of a special embedded tool. You mark the device, create a table and choose what you like in E-katalog. There is plenty of interesting tools in there, like dynamics of prices, ratings, shops, etc. And a lot of articles, reviews, photos and videos. Click the link in bio, Open E-katalog and choose the device you need. By budget and functionality. Let's get back to the comparison of companies Now, we're gonna dig in financial reports. I like that very much. Here they are, all of them. These are official reports on financial condition, production of

everything around for shareholders in 2002, 2003, 2004, 2005. By they way, you can read them In sources in bio. That's if you'd like to read something so much, because we will show you everything important in this video now. Okay, let's look at the numbers of produced cars. And everything is getting clear. VW, year 2002 - 5,023,000 cars. Year 2003 - 5,020,000 cars. Year 2004 - 5,093,000. I remember that, I shouldn't read. And year 2005 - 5,219,000 produced cars. Porsche with its 70-80 thousand cars could be lost in those issues. And it could be lost in

the total profit of the concern. The eyes read, the mind is here, not somewhere else. We're smart, aren't we? Don't forget about it. Now, here's the line not only about car sales, but about all the global income of the concern. And what do we see? Year 2002 - 108 billion euro. Year 2003 - 118 billion euro. Year 2004 - 126 billion euro. And year 2005 - 133 billion euro. That's a shitload of money. I remind you, in 2005, Porsche made 10.3 billion dollars, and it's a bit less than 9 billion euro at that time. So,

Porsche can't hold a candle either by money, or by the production volume, number of factories and assets. Volkswagen is better. That's why this task is crazy. But at first sight only. You should look more careful. The key is also in net profit. If we read Porsche's financial report, there is their net profit we can see: year 2002 - 565 million euro of net profit. Year 2003 - 690 million. Year 2004 - 779 million. And in 2005, 1,393 million euro. That's the net profit. And what about VW? 2002 - 2,597 million. 2003 - 1,003 million euro.

2004 - 697 million. 2005 - 1,120 million euro. Once more, if you don't get it. Making a couple of dozen thousands of their niche cars, in 2004 and 2005, Porsche made more money than the giant VW empire combined together during the same years. Oh yes. And you look at that and think, what's up now, is VW screwed? Yes, it is. If you make only 697 million euro when your amount of business is 125 billion, that's just ridiculous. Even in 2005, 1,120 million, that sum was twice as large, but still, with the amount of business In

133 billion, it's just auf Wiedersehen! All in all, Volkswagen was a giant, hulking, inefficient, self-indulgent Schwein. And because of low financial results and poor relations of VW with financial community, company stocks were cheap. And all the company was cheap, something like 17 billion dollars. At that time, it was 13 billion euro, and strange as it may sound, that's pocket change. You just take this sum from your pocket and buy it. I'd like to make a proportion, so that you can realize the numbers, and everything will be clear. Imagine someone comes up to you and says:

look, here's a business, it costs 1 million rubles. Its amount of business per year is 10,200 million, and net profit is 86,000 rubles. Would you buy it? Well, hell knows, it's too little net profit for invested 1 million rubles. And if they say to you That this company has on its balance different assets for 10 million rubles, and you could get them whole for 1 million? And plus, you could get access to all financial streams. Should you take it? Well, of course, you should! It's practically free! So, VW was such a good bait for every

person who has in their pocket extra 13 billion euro, and some people do have such money. Fancy that. Of course, this deal wouldn't bring some profit momentarily, but asset volume plus reorganization could bring some very good dividends in the future. And the most important thing is that many people were ready to buy Volkswagen. Everyone was waiting for a right moment to assault. And Porsche couldn't allow such an outcome in any way. Because VW assembly lines produce Porsche's golden mine - Cayenne. And all VW in general is an important Partner for the company. So such an

asset couldn't be lost in any way. Porsche had to attack first. At least, they couldn't allow anyone to grab VW. If Porsche overlooked the merge of VW and some other concern, then all Porsche's business could have crumbled in one moment. Who knows what new owner would think and if they would be interested in collaboration with Porsche? From that point of view, the idea of Coming at VW sounds convincing and rational. Furthermore, we know how much money Porsche did. Plus, Porsche was in good standing with banks in the middle of the 2000s. They could get an

approved credit for that without any problems at all. And you think right away: you should act! You can't waste such a chance! Yes, you can't, and those guys began to act. Chapter 4. Wiedeking starts to act So, we are now at the time period of 2004-2005. Porsche has a large sum of ready money. They have something about 6 billion dollars on their accounts, and a plan to take over VW. In its turn, VW makes crazy engineering about Bugatti Veyron and doesn't pay attention to their financial condition and the climate of the capital market. In the

next three years, Porsche will set a scheme, simple enough but brilliant. So that you could understand it completely, so that the puzzle in your head was complete, I have to read some context to you - about exchanges, Bonds, shares, etc. Now I recommend you to put away your Instagram, food, dishwashing, and to listen to me carefully as I speak. Because if you understand everything, and put it together in your head, your brain will have an orgasm. You have to use your brains, it will be a bit hard sometimes, but trust me. Trust me, you will

have an orgasm. I'm good with orgasms. And if you miss something, any fact at all, you wouldn't be able to comprehend the whole situation. Don't be frigid and listen carefully. We all heard that big companies have something called stock, or shares. Technically, a share is a piece of paper that gives you right to own a part of company that released them. Roughly said, if some company released 100 shares and you own one of them, then you own 1% of the company. Well done, you. Take your dividends. According to the share type, you can get a

part Of company income as dividend payouts, or just be a shareholder, and the cost of your share will grow as the company grows. Here's the fact you hardly thought of: the stock exchange, the stock values, blah blah, it's all second-hand. Like in case of cars. The company released some amount of bonds, sold them to its primary shareholders - a narrow circle of people, typically, - and then resales begin with wandering from hand to hand Of papers with run. Today, there is a fancy word IPO. This is the initial public offering of bonds by some company.

All the rest operations - it's just people resaling papers from hand to hand. As a rule, by initial offer on IPO, the company thinks of some stock value it wants to gain from their release by itself. Or some agents who help the company with IPO say, "You can count approximately On such costs." Final costs. It's like with cars. The company launches a car and say how much money it wants for it. Accordingly, all the people who agree or who're allowed to buy, they buy such a car. With shares, it's all the same. Well, it would

be logical to compare IPO with release of some exclusive cars because not all of us could have access to IPO - and not all of us could buy an exclusive car. You can't just enter from the street and buy anything. And next, the cost of the car depends on the secondary market, and on the public opinion about this car. If the car is valued by people, it wouldn't recede in time. And some rare or, for example, exclusive cars even grow in prices. That's the same story on the stock market. Not only financial reports affect the

value of the company and their shares, but also people's relations and trust In a certain company. That's exactly why some companies could be overrated or underrated by the market. People resale stocks among themselves through the market. According to the strength of their trust into the company, how they believe in its high-potential future, how much money they're ready to pay for its shares. That's why Tesla's shares cost hell of a lot. Here's Tesla's financial report, I have prepared. According to all the reports, it shouldn't Cost so much, but people believe it to have a future, and

they're ready to buy each other's shares for 500 or 800 bucks a piece, or whatever the price is now, I don't know. Although, according to all the data, they should cost less. Exactly because of that some pompous headline news could plummet the stock value. Elon Mask smoked a joint at Joe Rogan's podcast, and everyone like, oh my God, is he a narc? How can he run a company with prognoses, what will happen with it in general? And blah blah blah, and at the same day, stock value plummeted. And the value plummets because people begins to

sell shares hastily. Because of mismatch of large supply with demand, the value falls down. And that's the case because, like on the secondary car market, the stock market doesn't have any regulator that could fix the price. The price is regulated by the market. What people in some certain mass believes, that will be the cost of shares. What for I'm telling you all of this? That is for. Porsche needed to act very carefully. If someone sniffed out the real plans of Porsche and made them public, who knows what the reaction of the market could have been.

Who knows how the share values could have changed. Both of VW and Porsche, that is. Who knows what the competitors could have done, and so on. It's highly unlikely something good would have happened to Porsche, rather the opposite. Because of that, they should have to keep stum. Because of that, those guys began to act very quietly and in stages. They didn't buy shares for their free money, they began to do that in stages. The first announcement of Porsche that they buy the shares of VW was on September 25, 2005. Porsche announced that they gained 20%

of VW shares for 4.2 billion dollars. And everyone began to look at Porsche with a big question in their eyes, like, hey, what's this? The company announced, and I quote, "Our planned investment is the strategic answer to this risk. We wish in this way to ensure the independence of the Volkswagen Group." And all the market was like, what was that with the VW independence, hello! You bought 1/5 of the company! How we could translate it into the normal language? There is a special law in Germany called the Volkswagen law. There is a special paper written

exactly for VW. It says that all the people or legal bodies that own more than 20% of Volkswagen shares have the power of veto on all the solutions, and, of course, have a seat in the board. If you have 20% and one VW share, so then without your consent no one can make a decision, a serious decision about the company. It's a special law in Germany, written exactly for VW. So, having bought 20% of shares, Porsche completely prevented the case that someone could come and harm their Cayenne production. That's what they meant when they officially

announced their share purchase. So that you should read all the announcements of some serious people. It's not "our planned investment is the strategic answer to this risk, we wish in this way to ensure and blah blah blah". It's "we make money here, and so that no one Could mess with us, we buy the right to send to hell anyone in the board who wants do something against us." That's the approximate translation. But all the financial community looked at this story with great suspicion, because no one realized why the heck Porsche bought a piece of hulking

and inefficient company. It was something wrong there. And the explanation of guaranteed independence of VW wasn't enough for smart people. But no one could do anything about it, Everyone just watched it happening. For now. By August 2006 Porsche increased their share for 5% more, up to 25%, and they began to press on German government so that they would cancel the Volkswagen law. At the first sit, that was a strange move. We just found out that this law guaranteed the safety of Porsche production. But there appears another variable. At that moment, EU already existed. And eurozone

isn't only about the common currency But also laws. And the Volkswagen law contradicted one of the EU laws about free movement of capital that said that the right of veto is given to shareholders with 25% package and more, and there was a special law for Volkswagen that guaranteed the same terms with 20% of shares. Why the heck are those preferences for a car factory? But there's another player on our scheme. It's the land Lower Saxony that owned 20.1% of shares Of all Volkswagen. Lower Saxony is a German land. Like we have our Central District, or

the Northwestern Federal District. Lower Saxony is the second land in area of Germany. Only Bavaria is larger. If you remember, in the first release of Rolling R Stories about Volkswagen I told you that allied forces captured Volkswagen after the war, tinkered with it for a few years, and gave it back to Germany. They gave it back to Lower Saxony. Originally, every piece of VW belonged to Lower Saxony, but then, nice and easy, banks moved in, private investors took some stocks of shares, and the land had a minimum essential share package in order to protect their

interests. So that the factory couldn't be moved anywhere, so that work places were safe, so that the factory paid taxes to the budget. That's sort of thing. And especially for that case, so that No one could take VW from Lower Saxony, there was a special law before the EU was gathered. So that the land was the main obstruction on Porsche's way to full control over VW. Because these guys didn't want any dudes with sports cars and cash. They would come, begin to remake all the process, fire workers, pay less taxes, or even move the manufacture

anywhere. Lower Saxony didn't want that. And Porsche didn't want a board member that protests against any decisions just because. That's why they increased their share up to 25% and pressed on the government in any ways so that they would cancel the law that contradicts the EU laws, to knock Lower Saxony from the battlefield. At which point, at all public events, Porsche denied that they were trying to take control over Volkswagen. That's why you should never listen To the officials, especially high-ranking officials. Everything you need is to follow their actions. And actions were the same. Porsche

gradually increased their share. By November 2006, Porsche had already 29.9% of company shares. In early 2007, they had 31%. Here's a rule of the financial market for you. If some fat guy with money appears, or a group of fat guys with money, and they begin to buy shares of some company, then what will happen to the price? Think a bit. I don't want you to just sit and drool before the screen. Come on, use... usual... fusion... Well, you see, I use my tongue not very well, and you should use your brains. If the share demand

grows, right here, even higher, then the price rises, that's right. Dudes buy shares for whatever price because they buy everything, and the diagram goes higher. By the time Porsche had 30% of shares, their cost was already twice as high Because Porsche was buying them strong. The financial results of VW haven't changed for all that time. At that moment, everyone almost realized what the deal was. And then, alongside with Porsche, this story began involving banks, private players and hedge funds. They also began to buy stocks. At that time, the financial market was split in two. One

half believed that VW shares would grow further because they believed that Porsche would continue to buy them. And this half represented by banks and hedge funds was also buying shares to sell them afterwards and make some money. The second half thought that shares were overrated because fundamentally, VW still was inefficient and the profit was little. The Volkswagen law was still in force. Porsche still struggled. That meant Porsche couldn't take the company under their control, and the moment they stopped to buy shares, the price would have plummeted. As soon as Porsche would stop buy everything, as

soon that brutal demand for bonds and stocks would fall, the price would have fallen, too. Of course, financial magazines released a bunch of articles saying that VW was overrated and the fall was imminent. So, the situation in 2007 was following. A bit more than 1/3 of shares was in hands of Porsche; banks and hedge funds had about the same amount, 1/3 of shares. 20% was in Lower Saxony, and the rest was dangling around in free circulation. I know, this is already difficult, but you should pay attention. I believe in you. Let's add another variable. It's

absolutely always the case, when people think that some company is overrated and is condemned to crumble, so-called bears appear on the market. Those dudes make their money off declining in exchange rate. How does it work? I'll explain in simple terms. Let's suppose, you have a Yandex share that costs about 1,000 rubles on the market. I think of myself as of a smart dude, I think the company is overrated and has to fall down soon. Or, perhaps, I know of some sort of inside scandal or some info that should appear soon and affect asset prices. My

logic doesn't matter, actually, the important thing is I believe that asset prices have to decline. And the most important thing is, I want to make money off it. I come to you and say, "Dude, lend me your Yandex share. If you need it, just say, and I'll give it back in a flash." You give me that share, and I sell it right away for 1,000 rubles, for the price in the moment. I wait for it to decline. And on the next day those shares actually lose in value, and now their price is 900 rubles per

share. I buy this share, return it to you, and then I have 100 rubles Of net profit. My debts to you are closed, no one owes anyone anything, and I have my money. Such move is called bear speculation, operating for a fall, or short selling. But it's okay if the price would really fall. If suddenly, after I sold this share, its value will rise up to 1,100 rubles, and you will demand your debt, then I'll be in trouble! I can't give your thousand back, because I borrowed a share, And I must return this share. And

it costs already 1,100 on the market, that bastard. That's why I have to buy it on the market for 1,100 and return it to you while losing extra 100 rubles. I hope it's understood. Nod if you understood. Attaboy. So, those bears who make their money off declining in exchange of bonds and shares, they came up to this situation with VW and began to lend shares. As everyone thought, The situation was perfect. And then, there was 2008. Unprecedented financial crisis. A giant economic ass. Perfect timing. Everyone thought they would make money off the fall. Every financial

magazine prints articles that VW shares should crumble soon. This excitement of buying short was enormous. By October 2008, 12.8% of all the VW shares were involved in short sellings. I.e. the total of all the debt obligations of the bears before the market was 12.8% of total amount of VW shares. The usual ratio of the shares in short sellings before the fall of the overrated companies is 4-5%. That is, everyone was waiting that VW shares would plummet right now. And here it was, the situation built up to its climax. Everyone was waiting for the fall. All

the market: banks, hedge funds, private investors, everyone. As soon as Porsche would announce they stopped buying stocks, the price would plummet down. And Porsche called a press conference and, seeing the widened eyes of the public, announce that they own 42.6% of Volkswagen shares and placed options for another 31%. Options aren't shares themselves, it's an intent to buy it. Porsche could effectuate that intent and buy those shares when they went on sale, Or they could not buy them. But placing those options meant that Porsche had money to do so. Without money, they wouldn't be allowed to

do so. And as soon as the necessary amount of shares appeared, they would take it for themselves. That was the first press conference when Porsche officially announced that they intended to gain the whole power over VW. And there were no reasons not to trust Porsche because everything they did before that was just buying those shares. And at that moment, absolutely everyone who was selling short, began to soap ropes, load guns and seek the schedule of arriving trains. I'll explain why. Here's the situation. Porsche owned 42.6% of shares, and they planned to buy another 31.5%. Lower

Saxony had a bit more than 20%. So it occurred that if Porsche got those options done, then only 6% of shares would be in free circulation. And short sellers had debts almost for 13%. Those shares wouldn't be physically enough for everyone. And everyone knows that neither Porsche nor Lower Saxony wouldn't be selling their shares. And the very large part of those borrowed shares was lent by short sellers from Porsche. And now, pay attention. Porsche were happy to lend those shares to short sellers because they knew they controlled the situation. And so, the part of short

sellers borrowed shares from Porsche, sold them on the market also to Porsche Because they were buying everything. Those shares didn't move, but the short seller had a debt obligation before Porsche. And now guys had to repay that debt and buy the shares somewhere to return them to Porsche. But they could buy them only from Porsche because there weren't enough shares in free circulation. And that meant Porsche could charge any cost for the shares, demand to return their debts, and short sellers had to buy them. And as soon everyone realized that, there was a fit of

hysteria. Everybody ran to buy some shares ASAP. The loss didn't matter, the most important thing was to clean the debt. And the shares were physically not enough, and the price went into space. On the first day after Porsche's announcement during the press conference about their intention to take over VW, those shares jumped from 200 to 500 dollars. The next day, their value rose to 1,000 dollars for one share. At this moment, VW became for one day The most expensive company of the world being ahead of ExxonMobil that cost 343 billion dollars at that time. VW

at their peak cost 370 billion dollars. In one day, the stock value and the company cost jumped to 82%. But the assembly line was working as before, and nothing changed from the point of production process. People were working at the assembly lines and didn't suspect that financial experts were jumping out of the windows of near-by offices. That's the work of financial markets. During the jump, Porsche threw 5% of shares on the market so that fellas could pay their debts. Porsche made billions of dollars off that. The shares that had been bought long ago for 100

dollars were now selling for 800-1,000 per one share. And all that was happening only because of Porsche's announcement that they were ready to take over VW. There are no precise numbers, but by various estimates, At that moment, Porsche gained 10-13 billion of dollars. And the joint losses of short sellers during that day made tens of billions of dollars. There's a version that the famous financial expert Adolf Merckle jumped in front of the train that day because he couldn't endure the losses he sustained on that very deal. What's the deal? Such a move operates on the

fringes of the law. In the USA, all heads of the company would be Arrested right away for that manipulation of the market. And in Germany, it was legal at that moment. And honestly, no one cared if someone was violating anything. It was 2008, all financial markets were in tatters, And Porsche were flush with money. It seemed Porsche were sitting pretty. They pulled a fast one, very boldly, for all the world and the financial community. They could be happy. But in reality, in spite of surplus profit, Porsche's scheme creaked at the seams. And it was the

perfect moment For a counterstrike. The counterstrike of a man who haven't said another word about the takeover for all the time, although many things depended on him. This man was waiting for the right time in shadows in order to attack Porsche. This man had a reputation of a brutal, cold-blooded, and powerful leader. This man was the head of VW, Ferdinand Karl Piëch. Chapter 5. "I am going to remember your name" Perhaps, hardly anybody could argue with the opinion that Ferdinand Piëch was one of the most strict and demanding leaders that were on top of a

car concern. Even the world "brutal" could fit the description of this man. But despite that, Ferdinand is an extraordinary person of the car world. I'd like to begin with the list of his accomplishments. As for VW concern, Piëch began his career in Audi department in 1975 as the head of the department Of advanced developments. Audi was then a small, average brand despite its colossal accomplishments in the '30s. The name of the brand was Auto Union, it was one of the leading German sports brands of the world. And by the '70s, it belonged to the flag,

and released unremarkable cars that were nowhere near being competitors with giants like Mercedes or BMW. Piëch was a talented engineer, and he decided to rely on Engineering supremacy. Because the situation with Audi couldn't have been fixed by marketing only. During Piëch's leadership, the decision had been made about implementing the all-wheel drive for passenger models of the brand that was called Quattro. And the original race car Audi Quattro, its quintuplex motor that destroyed its rivals in the rally, that was also Piëch's project. This man needed only 8 years to make Audi from an invisible brand of

a giant concern To the world-wide known star. But as we realize from the context of this video, just wins in races don't fill the belly, You need some right financial and manufacturing policy. What Wiedeking did in the 2000s with common platform for Porsche 911 and Boxster, Piëch did with Audi in the '80s. He combined models 80, 90, 100 and 200 with one platform, and by that he reduced expenses for production and design of those models. And he invested additional profit Into new technologies of zing coating of the body, of aerodynamics and other things that made

his model only better. For example, the aerocoefficient of frontal resistance on Audi 100 from 1982 was the same as the one of second generation KIA Ceed. Huge square sedans from the '80s and modern hatch backs from the 2010s. The difference amounts to 30 years, and aerodynamics is the same, 030 Cx; in the '80s, that was sky-high For every large sedans of that time. Exactly such accomplishments made Ferdinand Piëch the only man who could be given that monumental task - to save VW from bankruptcy. A few chapters ago, we were joking that financial results of VW

in 2000 were just 1.2 billion euro such little profit, oh, that sucks! But as I always say, any numbers should be seen in dynamics. If we look at the numbers at the moment when Ferdinand Piëch was taking the office of the VW CEO in 1993, here's the report... the hair on your ass will bristle. Because at that time, VW had been losing a billion euro per year, and not some petty 150 million dollars that Porsche lost in the '90s, but a billion. When Ferdinand became the head of the company, they had 3 months before going

bankrupt. So, imagine, you have a visitor that says... Hey you, good morning, But not for you. Okay, here's a big company with several factories and several tens of thousands of people working there, and everyone has families. You must keep work places intact. There are unions, and mayor of Lower Saxony, and without them you can't make any decision. But that's okay, you'll handle it later. The most important thing is that the development in general loses a billion euro per year, that is about 3 million euro per day. As we speak, the company flushed 100 thousand euro

to the toilet. So, this is a thorn in your side now. Handle it. And the main thing is, you have 90 days to complete the task. Good luck to you, I'm going for a beer. Perhaps, I'd shot myself during that conversation, and Piëch didn't even lose his hair on his head. The only ruling model that can turn the situation to another direction at very short notice and make people work for the result with total self-denial, that is dictatorship. Or army ways, that differs not so much. So, Ferdinand became a dictator. A very successful dictator. On

the very first day, he fired all inefficient managers and heads of department. 8 of 12 production sites were just stopped, and only the most efficient were left. As soon as Ferdinand took his post, he brought a very famous although narrowly known manager to the VW - Jose Ignacio Lopez. It was one of GM top managers who worked with reducing expenses and didn't let GM to sink during the fuel crisis in the '70s. When unions tried to open their mouth to say they didn't agree with anything, Ferdinand closed it with a punch. But you have to

give Piëch that he didn't follow the path of mass firing. He just reduced work days and salary at 20%. Technically, he ordered a 4-day week. Ferdinand wasn't to fussy with anyone. Not one leader of large auto conglomerates fired their management in such amount as Piëch. If someone tried to debate Piëch's decision somehow on a meeting, or said they wouldn't agree, there was only one answer: "I am going to remember your name." I'm not joking, that's a quote. But the main thing is that it worked. Ferdinand Piëch saved VW from bankruptcy with his iron fist. As

soon as the company felt its legs, He continued his war with expenses with much more zeal, and his first engineering offsprings within the new strategy were PQ34 и PL45 - MQB for Golf IV family, Bora, Beetle, Octavia, TT, A3, Seat Leon and so on - and lineal platform for Passat B5, Audi A4 or Skoda Superb. It was Piëch who started the global movement of all car concerns towards the platforms. By the example of VW everyone saw That it was the future and it worked. As he restored financials, Piëch began to make in empire from this

giant company, as he bought everything he saw. Here's the year 2002, this report, and here we are: Skoda, Bentley, Bugatti, Lamborghini. And before 2012, there were MAN, Scania and everything else that is in VW. Piëch added all of them to the company. And if you don't know, 1998-2002, VW produced Rolls-Royces. They bought the manufacturing license together with Bentley. Well, why should buy 1 brand instead of 2? Why not? And only in 2002, BMW bought in manufacturing rights from VW. In 1994, Ferdinand created a special department - Volkswagen Financial Service. Actually, there is a bank inside

the VW company, and at the moment of that period, in 2008, there were 5,000 people working there. And the aggregate amount of assets Of this enterprise was 60 billion euro. Veyron, Phaeton, Bentley Continental, those are all Piëch's projects. A2 was also made by Piëch. And the speed record of the civic car with 304 mph also belongs to Piëch's creation - Bugatti Chiron Supersport. By the way, it was recorded on the VW track in Lower Saxony that was also given to the company under Piëch. By the way, during the creation of the first Veyron, If some

engineer didn't make his task in time, he was fired right away. You shouldn't mess with this guy. Such character was sitting on the other side of the barricade opposite to these two joyful guys. And when this fiesta with Porsche and shares happened, that strict and cruel VW dictator was just sitting in silence as if he didn't notice the situation. Everyone thought like that, at least. During those several years when Porsche tried to gain control Over VW, Piëch hadn't said a word. But whatever appearances, he understood everything and was waiting for the right moment to turn

the tables on in one moment, and this moment appeared in 2008. Chapter 6. Fightback The thing was that Porsche bought shares on credit. The first tranche in 4.2 billion euro for the first 20% of VW shares was completed by Porsche by their ready money, and everything else Was bought for borrowed resources. In 2005, absolutely each and every bank wished to give credit to Porsche because they were extra profitable, and no one doubted that Porsche would return those money. But by 2008, Porsche's debt was 11.9 billion dollars. And that was not enough to repay the debt,

they had to pay percents. And who remembers why 2008 is remarkable beside the golden age of emo culture, underground culture, burning September, etc? That's right, the global financial crisis. The global banking industry was seriously shaken, and several large banks went bankrupt. All this situation on the capital market ruined Porsche's play very much. No one hurried to give credit to Porsche, on the contrary! Everyone wanted the company to return their money the sooner the better. And in this year, Porsche's sales plummeted by 27%, like the rest of the premium sector. That fact didn't add to the

Stability of the situation. Although we remember that Porsche got some fabulous income after their stagging, 10-13 billion dollars by various estimates. But it's important to realize that all that income was on paper only. In simple words, the income on paper. You bought a share for 100 dollars. In while, it began to cost 200 dollars. Technically, on paper, you have 100 dollars income, but you have no cash. But when you have only one share, it's not a problem to transform it to cash, no problem at all. You can sell it, that's it. But when you have

1,000 shares, you can't just sell everything. As soon as you begin bulk selling by throwing shares onto the market, the price will be plummeting, and in the end, those shares would cost nothing. And you are sitting, very pleased, on the pile of those shares, and nothing you can do. Plus, in addition to that, Porsche used all their free money and resources to buy bonds and to increase their share in VW. As a result, they made their package at 50.8% of the whole amount of VW shares. All this combined made Porsche bend over backwards. We remember

that Porsche was extra profitable before the crisis, but they had relatively few free resources. Technically, debts on credits Amounts to 2 yearly turnovers of the company; not net profit but yearly turnovers. The point being that you have the income from increased asset prices only on paper. Shares cost more, yes, but you can't sell them, because your asset prices would fall right away. And income taxes from black marketing Porsche gained, and also percents, they should pay it all in cash. And even if the shares could have been sold without the downside, They couldn't do it any

way to gain cash. Because selling those shares meant throwing away all the results of the merge. They had to pay but they had no money. Sounds like kaput. Porsche owed to 15 banks, and CFO Holger Härter tried very trick to reorganize their debt and get another loan to cover credit percents and buy some time until the crisis passed. But the banks waited and didn't give consent. It didn't pay for them, they were stalling to squeeze a higher call rate out of Porsche because banks were in total control over the situation, and there was no retreat

for Porsche. And if one bank only demanded to return the debt right away, Porsche could turn bankrupt because they had no cash. The day before the settlement of debts, the panic-stricken CFO Holger Härter managed to convince the banks to give them extra loans. And in doing that, he had to hide the real situation, he constantly diminished Porsche's real debts, and overstated Porsche's real income. Yes, it's illegal. But when the company needed saving, the CFO had nothing to do but to cheat. Nevertheless, he managed to get from the banks a loan for 11.2 billion dollars that

covered Porsche's current problems, yes. But it was given with a term that 4.4 billion dollars Should be returned by Porsche in half a year. As we can see in this report, Porsche's total revenue during 2008-2009 business year was -3.5 billion euro, or -4.6 billion dollars. Of course, it's impossible to find 4.4 billion dollars for half a year. The only way to safety Wiedeking and Härter saw was canceling of the Volkswagen law and removal of Lowery Saxony from the board. If the law was canceled and Saxony lost the right of veto, Then Porsche as the only

shareholder with share more than 20% could have done anything with the company. And VW had 12 billion dollars on reserve accounts for a rainy day. And Porsche could have done anything with that money and would solve all their problems just like that. But despite the pressure, the government didn't cancel the law. They were just sitting, waiting, and watching the situation. Also the government rejected Porsche's request for financial help In order to postpone payments just a little. Technically, Porsche were in a tight corner, and at a brink of devastation. Everyone knew that, and Porsche's' financial reputation

was just ruined. There was a lot of articles that Porsche bit more than they could swallow. And Piëch had been waiting for that exact moment. Piëch got up from his imperial chair and began loudly criticize Wiedeking for incapable leadership. He said Wiedeking was responsible, That he led Porsche into the financial hole. And the most important thing is that Piëch said that Wiedeking should be brought into account. He made the first of such announcement on presentation of new Volkswagen Polo. At the same time, he said that Porsche would get VW's money with limits. At that moment,

Porsche still was the main VW shareholder, and they should have been receiving dividend payout, but Piëch decided To slow them down a bit. Because it was profitable for him. Plus, he realized that the only way to save Porsche was the ready money from VW accounts. Without his permission, they wouldn't get it. And at the moment, when Porsche's board was agonizing and begging banks to give them more money and to postpone payments, Piëch drank his coffee. He participated in those meetings and knew he had all the trump cards in his sleeve. He removed all solution approaches

In any way possible to remain the only one who could help. Yes, Holger Härter bought a bit of time and convinced banks to wait a little. But it didn't solve the main problem because Porsche had no money. Piëch waited for the moment when Porsche was in the dead end without any solution, and he like: "Okay, suckers, look here how it's done. I have a war chest right here, and it has 12 billion euro of pocket money in it. You don't have my company's Controlling interest. Mayor of Saxony is my pal, so I don't care what

you think and what you want. Here's the deal. This boy with mustache has to eff off, and his financial lapdog should be tried. Here's one billion euro for starters. Buy yourself some diapers. And I'll handle this with banks. You have no options anyway. You will do what I say because I'm in charge." And everyone ate that. In a while, Piëch gave his personal financial Guarantee that he would deal with Porsche's debts and convinced all the banks to have patience, to wait and not to sue anyone in order not to bankrupt the company. Just wait, it's

okay. And everyone agreed because Piëch was sitting on a giant bag with money. And you shouldn't disagree with this guy. Or he'll spank you. And so, after taking 1 billion euro from VW, Porsche owed them a debt. In 2009, as directed by Piëch, Wiedeking and Härter resigned. Look at them, how happy they are. Of course, all the world wrote about that. With that move, Piëch showed that even if they were smart enough to save the company from the crisis, getting big was out of their league. Only daddy had actual balls here. Of course, not everyone

in the VW board supported the decision to give money to Porsche. But try to say Piëch in the face that you don't agree with something. You will agree right away. Of course, Piëch gave the money Just out of goodness of his heart. What was he doing during the time after he saved VW from the crisis? He was buying car brands. And the same destiny awaited Porsche. Porsche's board tried to do something, to squirm out, to fuss - but that was it. The hunter's jaws were already closing, and any try to free themselves looked like convulsions.

Porsche had so many debts that they had only one choice: either sink down or give up to VW. And in the fall 2009, Volkswagen buys Porsche's car business for 11.3 billion dollars together with their debts. The deal was being prepared for almost a year, and the merging process stretched a bit, but that didn't matter. Piëch was able to make the main thing: to add Porsche to his empire; although just a year ago, Porsche believed they could swallow the giant. Technically, Porsche bit more than they could chew, and it may seem to be the end of

the story. Porsche lost. Wiedeking's ambitious ideas didn't work and ended up with merge and loss of independence. But do you really think that some hire was able to do such things with the company upon his own initiative? Don't you forget that Wiedeking was a hired employee. Yes, talented, yes, well-paid, but he wasn't the owner. Wiedeking was just an executive, and he didn't hide it. In order to do such things, to play with the powers that be, just being smart and talented isn't enough. You should have some real might and power. And there was a man

with those might and power. And I didn't lift the curtain that was behind Wendelin's back on purpose. There was always a man behind Wiedeking's back who silently approved all this shady deal. This is the last person in our scheme, and he's very needed in order to completely understand what happened. The man behind Wiedeking's back was called Wolfgang. And his full name was Wolfgang Porsche. The grandson of the Ferdinand Porsche. That was the actual head of the company. And Wolfgang Porsche knew Ferdinand very well, Ferdinand Piëch that is, long before this situation with merger. They were

cousins. Chapter 7. Family conflict for billions of dollars Dr. Wolfgang Porsche, the head of Porsche's supervisory council and the most Influential person in the company. At the same time, he's a son of Ferry Porsche, the founder of Porsche company, and in his turn, he's a son of Ferdinand Porsche. With those simple calculations, we realize that Wolfgang Porsche is a grandson of Ferdinand Porsche. Ferdinand Porsche had two children. The first was Ferdinand Anton Ernest Porsche, and everyone called him Ferry so that no one could mistake him for his father. And the second child was Louise Porsche.

When she married, she took her husband's family name. Piëch. And Ferdinand Piëch is a son of Louise and a grandson of Ferdinand Porsche, just like Wolfgang who is his cousin. They are family. Porsche and Piëch clans are one of the richest and most influential clans in Germany at this time. The Volkswagen Beetle is Ferdinand Porsche's offspring, he gained his rights to design it. And after the war, when VW began Mass production of cars, paying no regards to the rights of its creator would be not fair, at least. Because of that, the Porsche family gained license

fees from every produced car. Plus, they got exclusive rights for realization of all the cars in Austria. And plus, they were allowed to use VW machinery for their sports cars Ferry Porsche began to produce. And since Beetle is the most popular car of our planet, Those license fees made quite a fortune and influence for the family. There always was a strict rule: the control over the family business had to remain in the family. On the one hand, that was an advantage: everyone benefited from negotiations with each other and no one would take business away. On

the other hand, not all family members were fond of cars. Sometimes, there were doctors in the supervisory council, or lawyers, or just people incompetent in car business. But Wolfgang Porsche and Ferdinand Piëch had a passion for cars, and they were destined to take the leadership of the company if not for a nuance. Porsche and Piëch branches were constantly in conflict with each other, but that conflict entered the acute phase during the third generation exactly. Originally, Wolfgang and Piëch had equal shares with Porsche, by right of heirs, per 10%. But first, everyone thought that Ferdinand Piëch

would be the head of Porsche because, being just a student, he proved himself to be a brilliant engineer. His graduation work in Institute of Technology in Zürich was the motor for F1 race car. And right after the graduation, Ferdinand held the post of CTO in Porsche under his uncle Ferry Porsche. At that moment, Porsche was a small family company that was not well-known outside Europe. Yes, 911 was already produced And even sold in the US. But Porsche was nearly not that famous as some Alfa Romeo, Ferrari, such brands. And in order to catch up with

competitors, they needed some resounding victory or some fierce announcement for all the world so that everyone would talk about Porsche. But the family was careful and didn't rush into action. As Piëch inherited the helm of the technical department, he often was out of tune with opinions of his family. He took 2/3 of company budget For designing race cars and launched Porsche 911 project. A race car to participate in Le Mans. As Piëch himself said, he wanted to make a present to his uncle Ferry who dreamed of winning 24 hours of Le Mans. At that time,

Ford, Ferrari and Alfa dominated there. Everyone realized back then that Piëch was insane. It was not enough to put all the money to design; but what about time? He had only a few months left. By those rules of Le Mans, the possible participant had to make a set of 25 cars So that you could use 5-liter engines, and for the unique race cars, there was a 3-liter engine. In order to manage in time, all the staff was involved. Not only people from the assembly line, all the company staff in general: secretaries, accountants, managers. Everyone went

wrenching. Piëch barely managed in time, and he presented to Le Mans committee 25 race cars. No one looked at them carefully. They couldn't pass any normal inspection, by the words of those who assembled them. In some cars, axis pins were from trucks because at that time, Porsche didn't have any normal ones. Anyway, in 1969, Piëch put his race car to race, and at first, everything was good: 917s were in two first places after the qualification. But Porsche failed the race itself because the pilot John Wold crashed on the first circle, and everyone else didn't make

it to the finish line. They just broke on their way. Dick Attwood, the pilot of one of the race cars, said, and I quote: "I was quite happy when it broke. Even though I was a leader with 6 circles margin." There was just 1.5 hours for Attwood to finish. That was clean time. He was an unconditional leader. So, imagine how scared he was out there when a professional pilot who goes for victory his whole life, was happy That his car broke and he finally could end this madness. The thing is, race cars were impossible to

control. They were very fast and the pilot never knew what this car would do the next second. They just flew down the track and prayed. The problem was in aerodynamics and lack of car testing before the race. After this ride in 1969, engineers noticed at some point that on the car's tail, there were No insects: mosquitoes, flies, anything. There only on the face. And that meant that there is no air pressure to the back part of the car. They corrected the errors, worked on the technical part, on safety and aerodynamics by expanding the tail. That

is the enhanced model. In 1970, Porsche raced again and won almost everything. After 10 rides, 917 Porsche took second place to Ferrari only in one of them. And in 1971, nobody Could even catch up with it. They made a new record of the track. After 20 years of losses in Le Mans, Porsche became undisputed leader. And the brand gained global fame. 917 is a legendary car. Some speed records made on this car survived for decades. Fancy the characteristics for 1970: 1,763 pounds, 12-cylinder opposed engine with 580 horsepower, Air cooling and max speed 223.6 mph. That

was some furious shit, and the whole world was talking about it. But that couldn't save Ferdinand Piëch. Although he brought Porsche to win, to global fame, no one liked his reckless dictate among the family. Everyone was happy with wins. But the perspective to jig to the tune of some crazy engineer for their whole life wasn't so fascinating. As if it wasn't enough that relations between Porsche-Piëch branches Were always tense! In 1972, Ferdinand fueled the flames a bit. By that year Ferdinand was already married, with 4 kids, and perhaps, he was bored. He decided to have

an affair with Marlene Porsche, the wife of his cousin on the Porsche branch, Gerhard Porsche. He thought it was perfect: nobody in my family loves me, I have nothing to lose, so I can screw with someone there. On the family dinner By the way, he screws your sister. Actually, my sister is your mom. Well, such family we are. Go making out. As the result - family butthurt, scandal, some dawdling, and the family council decreed that no one from the Piëch branch will participate in operational management of the company. And the Porsche branch took all the

100% of voting shares. The Piëchs kept usual shares, so they were like cuckold leaders: You can watch but not decide. And it meant for Ferdinand that he needed to search for a new job. And Gerhard Porsche, whose wife Piëch dragged into his lair, was Wolfgang Porsche's brother. And of course, that one didn't approve such moves. And it's only natural Wolfgang was among those people who wanted the Piëch family to have nothing to deal with the company leadership. So, in 1973, they finally got it, and Piëch was kicked away from Porsche, in shame. For a while,

Piëch was working as a Mercedes consultant taking part in design of 52 M16 diesel engine. And then, in 1975, he came to Audi. What about his further history of Ferdinand's progress around career in VW, we already know it. And Wolfgang was Ferdinand's direct opposite. He wasn't so loud and pushy, he was a calm man with a cunning spark in his eyes. He worked with Porsche all his life, quite calm, growing and developing his business. Of course, he never showed his accomplishments To the public, he never made loud announcements, he doesn't even have his page in

Wikipedia. That's a shame! And officially speaking, during all that period of time, Wolfgang didn't have any official post in the company till 2007. As if he was just hanging around there. But all the employees, starting from workers on assembly lines and finishing with head managers, called him the company symbol. Even the official site of our dealers has this phrase. The same article said, His only action was putting imprint. He didn't give orders, he put an imprint. And that is Wolfgang's exact pattern. Officially, he entered the observatory council of Porsche in 1978. Although he certainly had

some power before that. At least, at the moment when Piëch was kicked out of there. Wolfgang began to manifest his influence in the late '80s. It was him who first of the family realized that their holding on traditions and foundations was self-defeating, and they needed to change something. It was this man who was initiator of Wendelin Wiedeking's hire and, technically, he officially gave the reigns of the company to the person out of the family, for the first time in their life. Although Wolfgang treated family traditions with due care, it was precisely him who let Wiedeking

engage specialists from Toyota who tore the old Porsche factory to shreds. Officially, Wolfgang does not confirm or deny in any ways his participation in Porsche's plan to take over VW, Everyone knows that they just couldn't make that decision without him. That goes without saying, that taking over VW, Piëch's offspring, meant for him returning to the family the same company their grandfather had founded. It was the victory of Porsche branch over Piëch branch. And, as a revenge for Piëch's screwing the wife of his brother, he would screw him and all his accomplishments. Yes, it was something

of financial pragmatism in that, but mainly, that were just internal squabbles between the members of one family clan That went too far. But let us return to the factual scenario. In one corner of the ring, we have a cruel dictator of an industrial empire, and in the other, we have a calm intelligent man who acts quietly but very precisely. One of them wants to regain control over the company he had been kicked out of, and the second one wants to expand his company till imperial scale and to prove in doing that Porsche branch was better

than Piëch branch. But what do we have in the end? Did Ferdinand win? Porsche stood on brink of devastation. VW bought the bleeding company out like many others before. But there was a catch: VW didn't merge with Porsche. They built an alliance Porsche-VW. This is a quite interesting scheme. I'm not sure if it wasn't some original plan. But if this scheme was born somewhere in 2004-2005, then I can call the man who thought that through - a genius. Let me explain. Originally, Porsche company was a designer agency and a producer of sports cars. Legally, its

name was Dr. Ing. H.c. F. Porsche Aktiengesellschaft. German names. Well, or Porsche AG, that is more common. As soon as Porsche began to buy VW actions, another company was created, Porsche Automobil Holding SE, and they bought all the shares using its accounts. Also, Porsche SE owned 100% of Porsche AG, That is the company that specialized in car producing. Roughly said, that scheme resembles GM a bit, that has a separate legal body, just an office with managers, and a lot of different manufacturers. But the difference is, that Porsche did this to themselves inside, and during the

crisis Porsche SE owned more than a half of VW shares and 100% of Porsche AG. And here's the merger: they created another pass-through company, Porsche Zwischenholding that got 100% of manufacturer Porsche AG and in its turn, it belonged for 100% to Porsche SE, the managing office. When the merger occurred, the controlling stake of 50.74% of VW shares was left by Porsche SE, and VW got 49.9% of Porsche Zwischenholding that still controls the manufacturer Porsche AG for 100%. And 50.1% of shares, that controlling stake, Was left by Porsche SE. That means, technically, the power over both

company is in hands of the managing company Porsche SE that belongs to the Porsche-Piëch family for 100%. And the head of Porsche SE is Wolfgang Porsche. Ferdinand Piëch, till the day he died in 2019, was just a member of the observatory council in this company, that's all. He was a simple manager out there. Yes, Piëch returned his power over Porsche. Almost half of the company was in his hands. But that "almost" is the most important thing. The controlling stake of VW shares was under the family control, and the head of the family was Wolfgang Porsche.

He was always hiding in shadows. When reorganization of the factory happened, and development of new models, and financial success, and ambitious takeover of VW on the exchange market, all the rays of glory and attention were pouring over Wendelin Wiedeking. He was called Porsche's golden boy, he was praised over all the success and Trashed in the media during the merger with VW. He received criminal charges together with his right hand, Holger Härter, for manipulating the stock market and for fraud by getting bank loans. And Wolfgang was the man who put Wendelin on his place, and he

always stood in shadows and controlled him like a puppeteer controls his puppet. The whole power rested in his hands, really. And Wendelin's severance pay, 50 million euro, only proves that Wendelin completed his task, took all the glory and all the sins, and retired. And Wiedeking's place was taken by Ferdinand Piëch who told with emperor's bravado about his victory and his genius during press conferences. And among all the people in the room, Wolfgang was always watching him. In silence, with a constant cunning spark in his eyes, among all the other people, among journalists, there was that

man who really held all the power. The power over two unbelievable car companies. The power that was brought to the family by the grandson of the extraordinary Ferdinand Porsche as it was originally planned. In 2013, the court determined Holger Härter guilty in fraud aimed at taking out a loan in order to buy VW shares. As a penance, Härter paid a fine of 630,000 euro. In 2016, after numerous sittings, the court of Stuttgart exonerated Wiedeking and Härter in case of fraud and manipulation of VW shares against the German prosecution. All the other attempts to discipline the

managers of Porsche and VW For manipulating stock markets didn't bring any result. Several thousands bankrupt short sellers who was trading VW shares still hold pleas, and gather class action lawsuits. Not one of those cases was served. Script / Music - Stas Asafiev Director / Editor - Daniil Gudkov Cinematography / Title Design - Egor Zorin Producer - Eliza Tsatsurina Commercial Producer - Sergei Semyonov Lighting - Vitaly Andreev Graphic Arts - Pavel Anisimov Sound and Mastering - Voize Dubbing Studio