Porsche buy of VW threatened by crunch

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Slow sales have meant that Porsche no longer has the cash flow it needs to service the €9 billion (£8 billion) debt it raised and magazine Der Spiegel quoted a senior source as saying the situation was "serious, very serious".

Porsche is also suffering from the effect of buying a lot of stock in the automobile giant at a vastly inflated cost.

Now Porsche has to make interest payments of €600 million per year.

The company's loan was refinanced last month through 15 banks and sources say that the company was prepared to sell VW such subsidiaries as Porsche Engineering, Porsche Design and Porsche Consulting, to secure the deal.

Under the terms of the refinancing, Porsche needs to repay €3.3 billion of the loan within six months.

It is thought Porsche could issue a bond to pay the first tranche of the loan as sales dwindle and a VW executive told Bavarian Radio: "The tail is no longer wagging the dog - VW is back in the driving seat."