ANALYSIS: The stakes are high in the Porsche-VW tug-of-war

Wolfsburg, Germany - The tug-of-war between Porsche and its bigger rival Volkswagen is about power, huge sums of money and a possible realignment of the German car industry. Porsche boss Wendelin Wiedeking is desperately seeking a fresh injection of cash to stop the debt-ridden sports carmaker from being taken over by Volkswagen, Europe's biggest auto producer. The Gulf state of Qatar has expressed an interest in buying into Porsche. But there are also rumours of talks with Daimler, maker of Mercedes cars, and even of a merger between VW, Porsche and Daimler. A decision on Porsche's future is expected in the very near future. Those involved are keeping mum, but various scenarios are being played out in the background. One is for Daimler to take a stake in either Porsche or VW through Porsche options or VW shares. Porsche owns 51 per cent of VW. By taking a stake in the sports carmaker, Daimler would be able to gain access to Volkswagen technology, particularly in the important compact car segment. Daimler is lagging in this field and would be keen to cooperate in the development of new models and propulsion systems. A possible alliance between Daimler and Porsche, both based in the south-western state of Baden Wuerttemberg, has been welcomed by local politicians, who believe it would keep jobs in the region at a time when the German car industry is suffering the effects of the economic downturn. In the northern city of Wolfsburg, where VW has its headquarters, company sources are less than happy at the idea of outside involvement, fearing this could leave VW 'in tatters.' VW has weathered the economic slide better than most of its rivals. It could, however, suffer, if a new major shareholder decides to siphon off funds for higher dividends instead of investing in new models, says works council chief Bernd Osterloh. Industry experts doubt Daimler has enough capital to buy into VW and Porsche. A more realistic option is for Porsche to sell a share of its VW stake to Qatar in order to gain urgently needed funds, says Nord/LB analyst Frank Schwope. If Qatar took a stake in Porsche Holding it would be a blow to the Porsche and Piech family owners because they would lose influence, he said. A Daimler involvement could raise problems with competition authorities, partly because the two firms already dominate the commercial vehicles market. Porsche could play its Daimler card to increase pressure on Qatar to agree to its terms. On the other hand, Daimler could send a signal to BMW that it has other options open. Talks on closer cooperation between BMW and Daimler are have reportedly become bogged down. VW patriarch Ferdinand Piech wants to see Volkswagen take over Porsche. The sports carmaker would then become the 10th brand in the Vw stable, but would remain independent, like Audi. Piech, with a 13-per-cent stake in Porsche, is reportedly sceptical of involvement by Qatar. If the Gulf state manages to obtain a near 30 per cent share in the sports carmaker, it could signal the end of Piech's dominant position, industry insiders say. Alone, Piech cannot stop the plans of his archrival Wiedeking but would need allies, such as his brother, Hans Michael, who also owns a 13-per-cent stake. In the past the family owners of Porsche have always taken important decisions together. The state of Lower Saxony, where Wolfsburg is located, also has a hand in the future of the carmaker. The state is VW's second biggest shareholder and has the right to veto important decisions. Over the weekend, the state's prime minister, Christian Wulff, met with a delegation from Qatar.