Porsche 2004 Annual Report Download - page 21

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The risks and opportunities associated with all Porsche’s business activities
are precisely examined and assessed. Market changes are noted and
analyzed without delay.
Vehicle manufacture is a complex process in which product defects
can occur that may eventually lead to claims being made under
warranty or product liability law, and product recalls may even be
necessary. Identifying and analyzing product defects in the various
sales markets allows Porsche to detect any reduction in product
quality, and its causes, at an early stage. An interdisciplinary task
force has been set up and meets weekly to discuss product quality,
analyze the causes of product defects, and initiate the appropriate
remedial action. This evaluation covers our entire production, inclu-
ding the quality of parts and our suppliers’ manufacturing proces-
ses. All product liability claims are dealt with centrally by our legal
department and are covered, as far as possible, by our international
insurance program. Financial provision is also made for warranty
claims.
Last but not least, the infringement of third parties’ rights can disrupt
design and development work or production. Porsche takes preven-
tive measures here too. To protect itself from possible infringements
of rights, it conducts research that systematically determines and
evaluates the industrial property rights of third parties.
Dependency Report drawn up
As mentioned in the report for the previous fiscal year, the participa-
tion structure of the holders of Porsche AG common stock has
changed in recent years as a result of restructuring of their holdings.
In accordance with § 312 German Stock Corporation Act Porsche
has been recommended by its legal advisors to draw up a report on
relations with companies associated with common stockholders
(a dependency report). The conclusions of this report are as follows:
Porsche AG has, in accordance with the circumstances known to it
when the legal transactions stated in the report were conducted,
rendered or, as the case may be, received reasonable payment.
There were no measures calling for submission of a report in accor-
dance with § 312 Paragraph 1 Sentence 2 German Stock Corpora-
tion Law.
Outlook
Although the effect of crude oil price increases on demand and on
inflation is difficult to assess, and renewed terrorist attacks could
hamper activity on the sales markets at times, moderate expansion
of the world economy is likely to continue in 2006.
Favorable financing conditions, high corporate profits in many cases
and increasing asset values are propping up demand, the threshold
countries remain dynamic and Japan is gradually recovering from the
severe crisis it suffered in the past decade.
Economic policy in the USA could, apart from budget and balance
of trade deficits, be facing a dilemma in monetary policy. There is
on the one hand a risk that the strong, persistent rise in real-estate
prices could form a ‘bubble’ which, if it were to burst, would have
considerable negative effects, especially in the private consumption