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Audi no longer sole cash generator for Volkswagen

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Audi no longer sole cash generator for Volkswagen

July 30, 2010 09:46 CET

MUNICH (Reuters) -- Premium carmaker Audi lost claim to being the sole cash contributor to Volkswagen AG, according to first-half results published on Friday that are likely to soothe concerns of VW's shareholders.

Volkswagen was entirely dependent on Audi last year to generate the money needed to finance an ambitious growth strategy that included acquiring nearly half of Porsche's sports car business in December for almost 4 billion euros ($5.2 billion).

Analysts had expressed concern that the other eight brands -- including the flagship VW marque -- seemingly proved unable to pay for investments without exhausting their own funds from operations at the same time.

Audi's results reveal however that the Ingolstadt-based carmaker's net cash increased to 11.80 billion euros ($15.4 billion) at the end of June, accounting for about two-thirds of the 17.5 billion euro war chest parent Volkswagen reported on Thursday.

This is a far cry from last year, when Volkswagen's automotive business would have been in debt at the end of 2009 had it not been for Audi's 10.67 billion net cash contribution to its parent.

Audi's forecast on Friday that liquidity at the end of this December would be higher than a year ago nevertheless implies that net cash could shrink by more than 1 billion during the course of the second half.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20100730/ANE/307309893/1193#ixzz0vBOOoBBP

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