VW Request
December 10, 2008
"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 on Tuesday, Dec. 9. He declining to say how much money had been requested.
"It is a question of obtaining public guarantees. It is not a request for recapitalization," the spokesman said.
VW had hinted several weeks ago that it was considering such a request after encountering problems with refinancing. The credit crunch has made it more difficult for banks to obtain funding on capital markets.
Financial Services AG and Volkswagen Bank have requested the credit guarantees from Sofin, a federal government agency with a 480-billion-euro ($618-billion-dollar) war chest. The government fund was set up in October to stabilize the banking industry by providing credit guarantees and capital injections.
The German government has also offered to inject cash into banks in exchange for ownership stakes, although relatively few have applied for the cash.
German carmakers considering similar moves
Financial Services AG has been a major contributor to the profits of Volkswagen, Europe's biggest carmaker. In the first eight months of this year it had a turnover of 8.2 billion euros and an operating result of 744 million euros, marginally lower than the 747 million euros for the year before.
BMW is also considering applying for state aid, a spokesman told AFP on Tuesday. At Daimler "all options are open," a spokesman for the financial services unit that oversees Mercedes-Benz Bank told the news agency.
"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 obtains state guarantees, it will be able to offer lower refinancing costs than those obtained on the market, which could give it an advantage over rival carmakers. Germany's car industry has been hit hard by the global financial crisis, which has plunged the country into recession and led to a rapid decline in sales.
Shake-up expected in global car industry
The current financial crisis will completely transform the auto industry globally, predicted Sergio Marchionne, the chief executive of Italian group Fiat. He expects only six carmakers to survive worldwide.
"This business is going to be completely different," Marchionne told Automotive News Europe. "It cannot continue as it did in the past. Independence in this business is no longer sustainable.
"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," he said.
The publication reported that Metzler Bank auto analyst Juergen 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.
In the United States, a vote was expected Wednesday on a $15 billion plan to bail out and restructure US automakers. But the initiative could face possible roadblocks in the Senate, according to US officials.