Audi AG and Volkswagen AG are close to closing an investment in the automotive giant, as the two companies negotiate a potential $13 billion deal that could help both brands remain competitive in the global market.
Audi AG is the largest automaker in Europe with a market share of more than 20 per cent.
It has invested in companies ranging from Mercedes-Benz to Audi, but the VW Group has made a string of acquisitions in recent years to bolster its position in the industry.
The VW Group is seeking to acquire more than 10 per cent of Audi, a move that could boost the value of the German automaker, which is struggling to maintain its position as the biggest player in the European car market.
The company has been struggling to fend off a number of rivals in the market, particularly Audi’s VW-Audi-Volkswagen Alliance, a consortium that has seen the price of gasoline fall dramatically over the past few years.
The deal would see the Volkswagen Group buy up about 25 per cent in Audi’s shares and 25 per, 30 per and 40 per per of VW’s shares.
It is expected to close in the first quarter of 2020, with the deal expected to be completed by the end of 2019.
The transaction is part of a wider overhaul that is under way at VW.
The group is expected spend $18 billion on new brands and brands that are “a step forward” from its traditional vehicles, CEO Martin Winterkorn said in a statement last week.
Audi has been looking to consolidate its brand and product portfolio in the face of growing competition from a range of new car brands, including Tesla, Google and Apple.
But the VW deal is not the first time Volkswagen has made deals with big names in the auto industry.
Volkswagen sold off its Audi brand and its parent company, Daimler, in 2010.
The move was viewed by many as a way to make a more aggressive move into the luxury car market, but it was criticized as a strategic mistake by some consumers.
Volkswagen also made deals in recent months with the likes of Ford, General Motors and Nissan, all of which are expected to make significant investments in the coming years.