Besides the ongoing negative publicity following threats from Volkswagen to cut the workforce in Germany to improve the company's viability, the company has been caught up in an embarrassing scandal involving corruption in Angola, India and elsewhere as the company attempted to expand its global business operations. Human resources director Peter Hart and the head of the works council, Klaus Volkert, resigned following the start of the corruption investigation.

Volkswagen was back in the news when its share price dropped initially following the news that Porsche wanted to buy a 20 per cent share in the group. This purchase would make Porsche the largest shareholder and this news also sparked a sell-off of Porsche shares. However, the shares in both companies rose later. Germany's financial watchdog said it would investigate the possibility of insider trading as the Volkswagen share price rose sharply shortly before the announcement.

Although VW and Porsche have long historical ties, with both companies' roots going back to the same Porsche family, there has not been any crossholding in shares previously. Even though the companies are sharing more and more technology and components, some analysts seemed uncertain about the strategic benefits of the move, believing it may rather be aimed at preventing VW being taken over by "predators".

However, the regional state of Lower Saxony, which holds a 19,2 per cent share of VW's voting shares, welcomed the move as "a great opportunity for the German car-making industry."

Volkswagen was also rocked by rumours of a failed boardroom coup aimed at chairman Bernd Piechetschrieber.

Troubled DaimlerChrysler is another German motor company to get into hot water. This time it was because German regulators opened a formal investigation into possible insider trading in the company's shares just before the announcement that Jurgen Schremp, the controversial chief executive of DaimlerChrysler, was to step down at the end of the year.

He is to be replaced by Dieter Zetsche, who led the resurgence in the fortunes of the company's US-based Chrysler Group. Since Schremp's announcement at least 18 executives have exercised options and sold shares in the company.

Interestingly, the next major development on the German automotive front was speculation that VW and DaimlerChrysler, the world's fourth and fifth largest vehicle manufacturers, were looking at ways of working together.

According to a German magazine, the discussions centred around cross shareholdings of less than 20 per cent, with the reason for this move being seen as a further ploy to protect the two companies from the threat of a possible hostile take-over. This would leave BMW as the only major German manufacturer "doing its own thing."

Meanwhile, across the Channel, in Britain, the motor industry was also under fire in the media. It has been announced that the country's accounting watchdog is investigating Deloitte over its role as auditor and advisor to MG Rover which filed for bankruptcy in April. This is a separate enquiry to one being conducted by the UK's department of trade and industry into MG Rover's collapse that cost 5 000 jobs. MG Rover had debts of R16-billion.