Where does VW stash its cash? Check under Audi's mattress

Volkswagen has denied reports that it wants to take over Fiat Chrysler, but if it does pull off a big acquisition, it will have Audi to thank.

Audi's net liquidity, effectively its war chest, jumped to 15.3 billion euros ($20.5 billion) at the end of June, versus $19.7 billion at the end of last year. Theoretically, this would be more than enough to pay the $12 billion for Fiat shares plus a 50 percent control premium.

And all that cash is generated without any material help from Audi's Chinese joint venture with FAW, impressive given that Audi sells nearly half a million cars in China alone -- more than a quarter of the brand's volume.

By comparison, Daimler's Mercedes-Benz cars, commercial trucks, vans and buses together suffered a $1.5 billion decrease in net liquidity to $17 billion during the same period.

BMW reported second-quarter results that showed surplus cash at its automotive segment dropped by $802 million during the first six months of this year. Its car business has a free cash flow not even half that of Audi's.

Volkswagen Group's consolidated cash statement, which includes Audi's contribution, shows net automotive liquidity of just $18.7 billion. This implies that the rest of the group would otherwise have posted a net debt of about $1.8 billion and highlights just how dependent VW is on Audi for the group's fortress balance sheet.

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