PORSCHE, the German sports-car maker, is ready to take control of the Volkswagen group, the world’s fourth-largest motor manufacturer.

Porsche chief executive Wendelin Wiedeking has confirmed that his company is prepared to increase its shareholding if, as expected, Germany’s so-called “Volkswagen law” is ruled illegal next week by the European Court of Justice.

Porsche swooped on Volkswagen in March and acquired 31% of the motor giant. Since then, a sharp rise in Volkswagen’s share price has increased the value of this holding more than threefold.

The Volkswagen law was introduced to guard against takeover when the present company was transferred to German control by the British after the second world war. It prevents any one shareholder from exercising more than 20% of the voting rights and gives both the federal government and the state of Lower Saxony the right to two seats on Volkswagen’s supervisory board.

The European Commission gave notice of its intention to test the law in the European Court of Justice four years ago. The case will he heard on October 23.

Dámaso Ruiz-Jarabo, the EU advocate-general, has said that he believes the Volkswagen law restricts the free movement of capital within the EU. His view is not binding, but in 80% of cases the European Court of Justice accepts his opinion.

Previously, Volkswagen has resisted calls for a change in the law, as has IG Metall, the powerful labour union, whose chairman, Jürgen Peters said: “The Volkswagen law has proved its value because it has contributed to the well-being of the company and its employees.”

When Porsche started to build a stake in Volkswagen in 2005, an understanding with the major shareholder, the state of Lower Saxony, seemed to guarantee that the company would stay in German hands. But now Porsche wants direct control. It recently raised €8.6 billion (£5.9 billion) with a share issue to fund its next move.

In an interview with The Sunday Times, Wiedeking said that Porsche was eagerly awaiting the court’s decision on the law.

“I believe they will write it off. And if they do, we will look at what makes sense,” he said. “We already have a lot of options to purchase shares at less than their current price. We are prepared.”

It was recently revealed that Wiedeking, 55, was the architect of Porsche’s move into Volkswagen. Commentators had assumed that this was the work of Ferdinand Piëch, a member of the Porsche family who retired as chief executive of the Volkswagen group in 2002 and is now chairman of its supervisory board.

Wiedeking, who is reputed to be Germany’s highest-paid executive but has no voting shares at Porsche, said that the controlling Porsche family was initially surprised by his suggestion.

“I am an entrepreneur,” he said. “I look for opportunities and constantly check what’s coming up.

“We were working with Volkswagen on the next generation of the Cayenne (the Porsche 4x4 that shares its structure with Volkswagen’s Touareg and Audi Q7) and I wanted a clearer connection to safeguard Porsche’s interests. We could not do this or the Panamera (the four-door Porsche sports saloon that will appear in 2009) alone.”

He insisted that these projects and the protection of undervalued Volkswagen, Porsche’s partner and supplier, from a raid by private-equity companies if the Volkswagen law were repealed, were the motivation for buying the shares. But he is pretty smug about the outcome. He said, with a chuckle: “We paid €5 billion for 31% of Volkswagen and now that stake is worth €16-€17 billion. Not a bad investment, eh?”

As befits the leading shareholder, Wiedeking and his management team at Porsche are an increasingly strong influence at Volkswagen. He and Holger Härter, chief financial officer, sit on the supervisory board. Härter is chairman of the audit committee and Wiedeking is a member of the executive committee that decides Volkswagen’s strategy.

IG Metall is already disconcerted by Porsche’s suggestion that there could be changes to pay and worker representation.

Wiedeking said that there is no intention to merge the operations of the two companies: “Believe me, if you mix the Porsche guys with the Audi guys and the Volkswagen guys you will have trouble. Each is proud to belong to his own company. My Porsche people are very proud of what they have achieved. They don’t want to build a bastard in the future, they want to build a Porsche.”

Wiedeking said the relationship between Porsche and Volkswagen is a two-way street. Technology originating at Porsche’s famed Weissach engineering centre can filter into the volume cars of Volkswagen, while Volkswagen plants supply body-shells for the Cayenne and Panamera. There are also useful cost savings to be achieved.

“Electronics account for 30%-35% of our development costs. Spreading this investment over, say, 2m cars instead of Porsche’s 100,000 will make a big difference – and the components will be cheaper,” said Wiedeking.

Faced with the threat of EU regulations limiting the carbon-dioxide output of cars, Germany’s manufacturers are desperately keen to show their green credentials. Volkswagen, like BMW and Mercedes, has presented new models with all manner of fuel-saving devices and promises low-emission hybrid power units in the future.

Porsche has a prototype Cayenne hybrid, but Wiedeking knows that this is one area where his company cannot make an impact. Environmental campaigners attack Porsche for offering only powerful, gas-guzzling, petrol-engined cars.

The chief executive points out that Porsche has reduced the car-bon-dioxide output of its cars by 1.7% in each of the past 15 years, but makes no apology for producing some of the world’s fastest sports models and most powerful engines.

He is unconcerned by the backlash against big 4x4s; Porsche sold more Cayennes last year than in the previous 12 months and the order book is overflowing. In its last financial year (to July 31), Porsche set a new sales record of 97,515.

The 911 sports car – in concept, 40 years old – is still its most successful model. Its cheapest car is the Boxster, starting at £33,170. The most expensive is the 911 at more than £100,000.

Of the European Commission’s call for an average carbon-dioxide limit, Wiedeking said: “Porsche doesn’t do average. We are top.

“The EC has to accept our business case. We have a special situation where the emissions of our cars should be compared not with Fiat but with Ferrari and Maserati. Then I would feel fairly treated.”

Wiedeking is not asking for exemption from the carbon-diox-ide regulations, simply for Porsche to be treated as a niche manufacturer that does not have small city cars to compensate for the top-end luxury models.

But that is also a contentious point. Production of 100,000 cars a year (increasing to 125,000 when the Panamera arrives) may be small in world terms, but is almost double that of Jaguar. Add the best profit-per-unit in the car business and it is clear that Porsche has ceased to be a niche player in the accepted sense of the term.

But then Porsche has changed much conventional thinking under Wiedeking’s direction. Who would have imagined, when he assumed command of the company 15 years ago and Porsche was in deep trouble, that in 2007 it would be poised to take control of a motor giant 50 times its size?

WIEDEKING TO THE RESCUE

THE jovial, moustachioed Dr Wendelin Wiedeking first arrived at Porsche’s Stuttgart-Zuffenhausen headquarters in 1983.

He was seen as a whiz-kid in production engineering, and oversaw the installation of a new body shop and paint plant.

In 1988 he left Porsche to join the Glyco metals company and two years later became its chairman.

Wiedeking came back to Porsche in 1991 as production director when the company was at its lowest ebb.

Porsche, established by Professor Ferdinand Porsche and his son Ferry in 1950, is majority-owned by the Porsches and the Piechs, two families related by marriage. After Ferry retired in the 1970s, it was agreed that future chief executives should come from outside the families, but successive appointees failed to turn the company round. In 1992 it lost $150m (£74m).

In October 1992, aged 40, Wiedeking was made “spokesman for the board of directors” – a prelude to his appointment as chief executive and chairman the following August.

Porsche’s share price has increased more than 60-fold during his tenure.

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