1.75 Billion-Euro Porsche Loan Denied by Germany

Germany’s government is unlikely to support Porsche's renewed request for 1.75 billion euros ($2.4 billion) in loans and canceled a review of the application, two people familiar with the situation said.

The Federal Economy Ministry called off a meeting of an eight-person advisory committee scheduled for tomorrow in Berlin to discuss Porsche’s request to state-owned development bank KfW Group, according to the people, who asked not to be identified because the session is private. German officials no longer see the need for a review after KfW rejected the loan request last week, the people said.

The decision increases pressure on Porsche to reach an agreement with Qatar on selling a stake in the Stuttgart-based carmaker or some VW stock options it owns to the Persian Gulf state to reduce 9 billion euros in debt. Porsche, which tripled its debt after boosting its stake in VW earlier this year, doesn’t have the money to exercise the options for an additional 20 percent of VW shares.

“We continue to believe that the loan request provides a basis for a decision” by the German government, Frank Scholtys a spokesman for Porsche, said today by telephone. “We’re still in talks with KfW.”

Porsche said on June 22 that it would make a second approach for government loans.

Source:Bloomberg

Audi speeds past rivals in mainland elite fleet deal

While BMW is likely to walk away empty-handed from China's lucrative government car procurement market this year, its German peer Audi has been dominating the market for a long time.

The Procurement Center of the Central People's Government (PCCG) said last Thursday that it has no plan to buy BMW cars this year.

In contrast, government procurement contributes about 20 percent to Audi's total sales in China, according to Zhang Xiaojun, deputy managing director of Audi China's Sales Division.

In 2008, Audi sold 119,598 sedans in China, a 17 percent increase year-on-year. China is now Audi's second biggest market in the world, only behind Germany.

The money Audi has made from Chinese government procurements and its avoidance of major public controversies should be the envy of other German luxury car competitors.

The image of an "official car" has helped Audi beat BMW and Mercedes-Benz, two other German brands which are also eligible for government procurement in China, the only market where Audi leads in luxury sedan sales.

"Government procurement has a direct influence over vehicle consumption of ordinary people. If a customer sees a model that is the same as the governor's, he will probably take it into first consideration. That's a big reason why foreign automakers pay so much attention to government market," said Hu Xiaowu, professor, School of Social and Behavioral Sciences, Nanjing University.

Compared to Malaysia, India, Japan and other countries that strictly require officials to use homemade cars, it is common for Chinese officials to favor foreign luxury cars.

"The higher the level of government, the higher the request for luxury. If the price of two cars is the same, officials always prefer the foreign brand," said Chen Min from Geely, a domestic automaker in China. Chen is responsible for government procurement of the company.

In 2005, Audi launched a new, prolonged sedan model A6L in China and it is now the most popular model among Chinese officials.

BMW got enrolled by PCCG only now.

"BMW cars have been involved in several traffic accidents in recent years and its reputation is not good among ordinary Chinese people. Besides, the central government calls for priority to domestic brands in the 4-trillion-yuan stimulus package. The news thus raises public dissatisfaction," said Hu.

Absence of domestic competitors is also a reason for the success of foreign automakers like Audi in Chinese government procurement market.

According to the standard set in 1999, sedans for officials at the minister and province governor level should be within 450,000 yuan with engine size less than 3.0 liter; vice-minister and vice-governor level within 350,000 yuan less than 3.0 liter; officials at other levels within 250,000 yuan less than 2.0 liter.

The price of Audi A6 and A6L sedans is around 300,000 to 700,000 yuan with engine size around 2.0 and 3.0 liter, which mostly covers the price and engine limit, while the highest price of domestic cars like Geely and Chery is about 100,000 yuan with engine size around 1.6 liter, much lower than the lowest limit.

"Our products are not high-end enough, which restricts the level of our target market. Our products can only sell to low level government officials at present," Chen said.

According to Chen, although vehicles of Geely were enrolled by PCCG in 2008, not a single car has been sold to the central government till now.

Source:China Daily

Audi TDI to reduce carbon emissions with The Nature Conservancy

Audi has committed to supporting The Nature Conservancy to help reduce carbon emissions as part of its public awareness campaign for Audi TDI clean diesel engines, which reduce carbon emissions by 20% over gasoline. Audi will donate $1 to The Nature Conservancy’s voluntary carbon offset program for every Facebook user who joins the cause at www.causes.com/natureconservancy, up to $25,000.

The donation will directly benefit The Nature Conservancy voluntary carbon offset program, which features the Tensas River Basin as its first project. The Tensas River Basin Project counterbalances carbon emissions by reforesting private lands to capture and store carbon, as well as to restore critical habitats to native species. Located in the Lower Mississippi Valley, the project will help to buy land, plant trees and to monitor the carbon benefits of these actions. Currently focused in the United States, The Nature Conservancy voluntary carbon offset program may soon expand to more places globally.

"Reducing carbon emissions through protecting and restoring forests plays a critical role in fighting climate change," said Zoe Kant of The Nature Conservancy. "Audi’s contribution will provide necessary support to our voluntary carbon offset program’s reforestation and forest protection projects, but it will also help us to bring the benefits of the project to a new audience of supporters."

The Nature Conservancy’s goal of reducing carbon emissions aligns with broader Audi objectives. The recently introduced Audi TDI clean diesel engine reduces carbon emissions by 20% over gasoline and is 30% more fuel-efficient. The Audi donation to The Nature Conservancy augments a broad public awareness campaign in the U.S. to highlight the ways in which TDI clean diesel can help America reduce carbon emissions and achieve energy independence.

"Our engineers are always innovating to reduce our vehicles’ carbon emissions, and we’ve taken a giant leap forward with the introduction of the Audi Q7 TDI clean diesel this year," said Johan de Nysschen, President, Audi of America. "But our commitment doesn’t stop with our products; we want to promote reduced emissions through support of organizations like The Nature Conservancy, and also to spread the word about the benefits of reduced emissions."


To join the Cause and trigger a $1 donation to The Nature Conservancy, courtesy of Audi, visit www.causes.com/natureconservancy.

Source:Audi Press Release

Audi Promotes Diesel "Right Now" Over Hybrids to Save Oil

Audi began a U.S. ad campaign this week focused on the viability of diesel autos versus gasoline-electric hybrids and those that run on batteries. A diesel Q7 sport-utility vehicle went on sale six weeks ago, and a diesel A3 wagon is due late this year.

“We’re not saying these technologies are nonsense,” Johan de Nysschen, president of Audi of America Inc., said yesterday in a telephone interview. “For us the appeal of the clean diesel technology is that it is here right now.”

Volkswagen and Audi have emphasized diesel engines, which power 50 percent of European cars, rather than the focus on electricity favored by U.S. and Japanese automakers. President Barack Obama’s administration seems to back electric autos over diesels, said de Nysschen, who is based in Herndon, Virginia.

One ad among Audi’s television and Internet spots shows barrels rolling through streets and onto a supertanker, saying that if a third of Americans drove diesel autos, daily imported- oil use would fall by 1.5 million barrels. Diesel engines are as much as 30 percent more efficient than gasoline models.

Diesel vehicles now account for about 3 percent of sales in the U.S., according to research firm J.D. Power & Associates of Westlake Village, California. Hybrids have a similar market share, J.D. Power estimates. Audi expects diesels to be 15 percent of all U.S. deliveries in 15 years.

Smell, Power

Rising fuel prices in the late 1970s and 1980s spurred automakers including General Motors Corp. and Wolfsburg, Germany-based Volkswagen to sell diesels. Buyers didn’t like the cars’ smell, lack of power and difficult cold-weather starts.

Newer diesel engines feature better performance and fewer odors. Stuttgart, Germany-based Daimler AG renewed the push for diesel vehicles in the U.S. two years ago with three diesel SUVs from Mercedes-Benz.

In 2008, Volkswagen resumed sales of its Jetta TDI after a one-year hiatus, while Munich-based Bayerische Motoren Werke AG offered BMW 335 sedans and X5 diesel SUVs.

De Nysschen said competition among the companies thwarted efforts to jointly market the advantages of diesels over gasoline-powered autos.

“If the automakers had any sense, we would collaborate and do this together,” de Nysschen said.

U.S. buyers of the diesels offered by all of the German automakers qualify for tax credits of as much as $1,800 for fuel-efficient vehicles.

Audi has outperformed most automakers in the U.S. in 2009, with sales down only 18 percent to 36,820 units through May compared with a 37 percent industrywide decline. The company’s market share rose by a third, to 0.8 percent, according to research firm Autodata Corp. of Woodcliff Lake, New Jersey.

Source:Bloomberg