Roddy Graham's Blog: 12 August 2009 - Prancing around

Date: 13 August 2009

Roddy Graham

The one on the Ferrari badge was originally the emblem of Italian WWI flying ace Francesco Baracca, whose parents persuaded Enzo Ferrari to use the logo of their late son on his Alfa Romeo race cars, later transferred to the road and race cars bearing his name. Meanwhile, the Porsche badge represents the coat of arms of the city of Stuttgart, where the company has its headquarters. The city was apparently built on the site of a stud farm, hence the horse: the antlers and red and black stripes are from the coat of arms of the state of Wurttemberg, where Stuttgart is located.

Not so long ago Porsche, one of the prancing horses, was the world's biggest automotive manufacturer by value. The other prancing horse, Ferrari, was dominating successive F1 World Championships with Schumacher (five drivers' titles) and Räikkönen (one driver's title). Now Ferrari is fighting behind Brawn and Red Bull.

While the fortunes of a race team will inevitably go up and down, the fall from grace of Porsche has been nothing short of spectacular. Just under four years ago, the Stuttgart sports car marque started an audacious bid to take over Europe's largest automotive manufacturer, the VW Group. This culminated in it acquiring a majority stake but at a cost, little known at the time.

To gain its 74.1% stake, via share ownership and share options, Porsche had built up an unserviceable debt of £7.8bn, while bringing various hedge funds to their knees in the process.

When things started to unravel, it looked as if Porsche would merge with VW. However, the Porsche family should never have discounted the management acumen of another member of the Porsche dynasty, the former designer of the infamous Porsche 917 race car, VW chairman Dr Ferdinand Piech.

A political king maker, Piech will now oversee the absorption of Porsche into the VW Group. What had always looked on the cards some 16 years ago will finally come about. Porsche, the once fiercely proud independent sports car manufacturer, forever associated with its multiple Le Mans 24-hour victories, will now become part of an integrated ten-brand car manufacturing group. As Ferrari is part of the Fiat Group. The star of the world's most profitable vehicle manufacturer has burned out in spectacular style. Essentially, a reverse take-over will now take place.

Yet another example of one deal too far. Now doesn't that sound familiar. As former Porsche head Wiedeking thought himself untouchable, so did Goodwin. Heads have rolled, and so with it brand reputations.

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