News that the Volkswagen Group is pulling the levers to spin off the highly profitable Porsche company makes it the most high-profile example in recent months of a growing trend to divide up automotive groups.
Why manufacturers and their suppliers are doing this boils down to two reasons: unlocking value and better preparing themselves for the shift to electric away from internal combustion engines.
The decision to list 25% of Porsche on the stock market is a good illustration of the first reason. Porsche has consistently been the Volkswagen Group’s most profitable arm in recent years, and therefore a separate listing could value it at as much as €90 billion (£75bn) – not far off the €116bn (£97bn) value of the entire Volkswagen Group, as per its current share price.
The Volkswagen Group would then pocket up to €11bn (£9bn) – a nice buffer against future disruption.