It’s been absolutely a hectic time in Germany these days. Recent weeks have seen a remarkable number of events coming out of the Stuttgart, with Porsche announcing an increased stake in Volkswagen. Currently Porsche owns around 31 percent of VW, but will move to bring their control to over 50% by year’s end. Strategically, Porsche stands to benefit from increased sharing with VW/Audi’s research and development departments. Additionally, they will be able to secure long-term projects with suppliers. Recently, the Porsche Cayenne has shared a platform with the VW Toureg and Audi Q-series vehicles. VW in turn has managed to clear a path to integration between it’s stakes in Scania and MAN.

Porsche North America’s Peter Schwarzenbauer has announced that he is leaving to pursue an executive opportunity with Audi of America/Canada. Schwarzenbauer is known for having pushed Porsche NA into an enviable position as the worlds top sportscar maker. He noted some time ago that Porsche NA would never offer incentives (source: http://wardsauto.com/ar/stupid_incentives_porsche/). Key will be to see if Porsche is able to maintain that stance in a severe market downturn such as that currently unfolding in the North American market. 2008 may prove especially tough for the 911 first because of the recession and second because there is a new model due out for 2009.

Some dealers, however, have indicated incentives. Porsche of North Scottsdale in Scottsdale, AZ had offered the Cayman at a near $3,000 discount during April.  This come as something of a surprise as Porsche had announced in March that sales were strong:

“In the first six months of the current financial year 2007/08 (August 1, 2007 to January 31, 2008), a pretax Group profit of 1.658 billion Euros was achieved. The prior year result on a comparable basis was 1.341 billion Euros. This includes the proportional VW result for the fourth quarter of 2006 of about 272 million Euros and it is adjusted for the one-off effect of the revaluation of VW stake that resulted in an appreciation of 521 million Euros. Calculated on a comparable basis the Group result after taxes increased from 0.897 billion Euros in the previous period to 1.295 billion Euros in the reporting period.

Operating result before taxes grew in line with the increase in the turnover and sales figures. Turnover grew by 14 percent to 3.49 (prior year: 3.07) billion Euros and sales reached 46,736 vehicles versus 39,265 units in the comparable period for the prior year. The expansion of the dealer network, in particular into the new markets, and also the increased attractiveness of Porsche’s product range contributed to these successes. The new top models of the successful 911 sports car series introduced during the reporting period, the 911 Turbo Cabriolet and the 911 GT2 were received with great enthusiasm by customers. And the Cayenne series was successfully expanded with the especially sporty Cayenne GTS which Porsche showed at the 2007 International Automobile Exhibition in Frankfurt.

However, the reporting period was once again affected by special factors, first and foremost the contribution to the result provided by hedging transactions in connection with the acquisition of VW shares. This rose from 791 million Euros to 850 million Euros. In line with the 22.5 percent holding in VW’s equity, the VW result attributable to Porsche reached 484 million Euros versus the prior year figure of 275 million Euros. The prior year figure was revised and increased by the proportional VW result for the fourth quarter of 2006 so as to ensure comparability.”

Porsche found out at the beginning of April that demand was indeed, falling. Porsche stock stumbled, and the company released this information:

“Porsche’s stock fell by as much as 5 percent in German trading after the company reported its U.S. sales dropped 24 percent in March, Bloomberg News reported Wednesday. The value of Porsche’s stock is down 17 percent for the year so far.

Porsche’s sales decline showed luxury buyers are now being affected by the economic slump and are bargain hunting, according to Edmunds.com’s analysis of March and first-quarter sales.

Sales of Porsche’s expensive 911 models plummeted by 76 percent in March and were sliced in half for the quarter compared with the same period a year ago. Similarly, sales of its less-expensive Boxster and Cayman sports cars were halved as well.

Sales of the reduced-price Cayenne GTS kept Porsche afloat. The German sports-car maker introduced an upgraded version of the standard Cayenne SUV but at a lesser price in February, which proved to be a smart move as Cayenne sales were the only Porsche models to see an increase. Also up were sales of certified pre-owned Porsches.

Worldwide, Porsche’s sports car sales are down as well.

Porsche had expected slower U.S. sales and announced in January plans to pare back inventories.”

Despite the dislike of the Cayenne by many enthusiasts, the SUV does seem to be keeping Porsche in the black. That car alone is probably most responsible for the takeover of VW Group, and bringing Porsche into the mainstream of the automotive industry.

Sources: IHT article
Porsche

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