UPDATE 1-EU regulators to probe aid for Porsche car project

Wed Jul 11, 2012 5:28pm IST

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* Porsche stands by aid request, no comment from Germany

* Porsche sales up 18.9 pct in June, deliveries up 14 pct (Adds reaction from Porsche, state govt, sales data)

BRUSSELS, July 11 (Reuters) - European competition regulators will examine whether 43.7 million euros ($53.6 million) of aid from German authorities gave sports-car maker Porsche an unfair advantage, in breach of EU rules.

The European Commission opened an in-depth investigation on Wednesday into funding of Porsche's next model, the Macan compact SUV, saying it was necessary because of the high market shares of Porsche and its future owner Volkswagen.

"The commission will check whether the aid is necessary and proportionate to provide an incentive for the investment and whether its contribution to regional development outweighs the distortion of competition," the EU regulator said in a statement.

Porsche, which is being acquired by VW, plans to build the Macan at its factory in Leipzig, eastern Germany starting in late 2013. The government of the state of Saxony, based in Leipzig, is planning to contribute 43.7 million euros and an unspecified investment premium to the Macan project which costs a total 522 million euros.

German authorities notified the EU regulator of the proposed aid in December last year, according to the statement.

Porsche stood by its request for German state aid, emphasizing planned investments and 1,000 jobs that are due to be added to the Leipzig plant.

"We're taking steps to improve the structures of the regional economy," spokesman Hans-Gerd Bode said. "That's fully in line with aid guidelines."

A spokeswoman for the government of Saxony declined to comment.

Separately, the Stuttgart-based manufacturer reported an 18.9 percent gain in last month's sales to 12,699 vehicles, compared with year-ago data. Six-month deliveries of Porsche rose 14 percent to 69,171 sports cars and SUVs. ($1 = 0.8160 euros)

(Reporting by Foo Yun Chee and Andreas Cremer; editing by Rex Merrifield and Elaine Hardcastle)

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