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Mike Stevens | Dec 23, 2009

PORSCHE HAS CONFIRMED cancellation this week of its contract with specialist production company Magna. The Austrian company was originally set to build the next generation Boxster and Cayman.

Porsche is expected to announce that the Boxster and Cayman will be built at the former Karmann plant, recently purchased by Volkswagen. The move signals the first shake-up in Porsche operations since Volkswagen took control earlier this month.

Despite reports earlier this month that Magna would seek around $680 million in development and preparation costs, Volkswagen CEO Dr Martin Winterkorn told Reuters this week that the Austrian company has been duly compensated.

"Believe me, Magna is very satisfied with this solution. We have made up for the expenses that were caused," Dr Winterkorn said.

Karmann and Volkswagen have a strong history together, thanks in particular to the iconic Beetle-based, Karmann Ghia of the 1950s.

Previous generations of the Golf Cabriolet have been built by Karmann, and with the current generation Eos reaching the end of its life cycle, a new Golf convertible would seem plausible.

Volkswagen itself has yet to reveal its plans for the Karmann plant, although it expects to create 1000 new jobs through future projects at the German facility.

The next generation Boxster and Cayman have been spied undergoing road testing in recent months, ahead of a late 2011 or early 2012 debut.

The new models are expected to feature a wider track than the current models. Porsche is reportedly considering a four-cylinder turbo-charged engine to help the Boxster and Cayman comply with strict new European emissions laws.

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