Volkswagen CEO praises Porsche alliance

Volkswagen CEO Martin Winterkorn has today praised VW's cooperation with Porsche, which holds 51 per cent of VW, saying he fully expects a group profit this year despite the general slump in the new car market.
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Mr Winterkorn said that together VW and Porsche had the potential to become "the centre of power for the international automobile industry."

"Our integration has come a long way in the last few months and I am sure that we will be able to drive our partnership forward in 2009, a difficult year for the auto sector," said Mr Winterkorn.

Only the sale of its heavy truck operations in Brazil kept VW, Europe's biggest carmaker, from slipping into a loss in the first quarter. VW is now challenging Toyota to become the world's biggest automaker.

Porsche, controlled by the Porsche and Piech families, plans to raise its VW stake to 75 per cent as early as this year should economic conditions allow.

But analysts have questioned whether Porsche can afford this step given its 9 billion euros (AU$16.5 billion) in net debt, prompting speculation that cash-rich VW could acquire Porsche's sports car business to relieve the debt burden.

Porsche, whose Porsche Automobile Holding European holding company would still own VW under such a deal, has described this scenario as "highly unrealistic."