Porsche Holding sharia compliant? VW not?

How is it possible that the Porsche Holding declared as sharia compliant while Volkswagen is not? Porsche Automobil Holding SE is a listed holding company and holds a stake of 53.3 percent of the ordinary shares of Volkswagen AG. Is there a mistake?

Good question, Enes. While Porsche may hold a large equity stake in Volkswagen, they are still two separate public entities that independently report their respective financials.

Volkswagen fails compliance for three reasons:

  • Over 14% of their revenue is derived from their lending business (interest-based loans)
  • Their debt-to-market cap ratio is 181% which far exceeds the 30% threshold
  • Their interest-bearing securities ratio is 49% which also exceeds the 30% threshold