March 4, 2024


The 911 is said to be a racing car to go to the opera. From its manufacturer, Porsche, and in the words of its CEO, Oliver Blume, that “it is between luxury and volume.” These are two ambivalences that show the privileged position of the Stuttgart car company, which this year celebrates the 75th anniversary of its first registration in top form: last year it carried out a successful IPO and ended with record results. Although it is already, by far, the most profitable brand in the Volkswagen group, by 2023 it intends to increase its margins, clinging to a demand for luxury items that does not understand the crisis.

Porsche obtained a net profit of 4,957 million euros last year, with an increase of 22.75% compared to 2021 and the best result in its history. Its income shot up 13.55%, up to 37,630 million. The sports car brand delivered 309,884 vehicles (2.6% more). In view of these results, the company, which managed to increase its margins by two points, up to 18%, seeks to repeat, and take its profitability up to 20%. This will result in a proposal focused on your segment premium —the most expensive— and, even, in a rise in its prices.

In a normal product, raising prices hurts sales. But the same rules do not apply to luxury: “If you ask any child in the world to say two car brands, they will say Ferrari first and then Porsche,” says Óscar Rodríguez, head of European stock market analysis at Banco Sabadell. This intangible, which he describes as “emotional space” —to which Steve McQueen contributed by driving one of his models at Le Mans, or the death of James Dean aboard a 550 Spyder—, gives the German manufacturer a margin of maneuver that few brands can be allowed.

“Porsche can increase its prices without affecting the volume of sales,” says Juan Felipe Muñoz, an analyst at the automotive consultancy Jato Dynamics. A commitment to its highest segment, cars that exceed 100,000 euros, does not harm it, defends Muñoz, but rather makes it more attractive. For Tomás Villén, CEO of Porsche Ibérica, the Spanish branch of the brand, the new approach “does not have to affect”. “What we are doing is expanding the product offer with more exclusive options, but keeping the alternatives that have existed up to now in our portfolio,” he defends.

The key, analysts point out, is that luxury consumers move more based on prestige than price. “If you are capable of having that emotional space,” Rodríguez points out, “it doesn’t matter what price you put, as long as there are people who have the money to buy it, something that will always happen, especially in Asian countries where next years”. With the microchip crisis, a trend that was already beginning in the market has been confirmed, points out the analyst: “The key to this business has gone from being volume to price.”

Added to that emotional space is a unique business position. Porsche competes above with Ferrari – the undisputed leader of supercars – and other luxury brands, but its range of models allows it to also be a rival to the high-end brands such as BMW or Audi. “It’s practically alone because it’s not entirely super-luxury, but it’s not premium either,” says Muñoz, “which gives it a privileged position.” Without models like the Cayenne, it would probably have gone bankrupt, says Rodríguez.

Luxury is not only popular with consumers who can afford it, but also with investors. Just a week after its IPO on September 28, Porsche became the most valuable car manufacturer in Europe, with a valuation of more than 80,000 million euros. Even above its parent company, the Volkswagen group. Since then, the firm’s shares have skyrocketed by almost 40%: from a starting price of around 80 euros, the share is trading at around 114 and has a market value of 105,000 million. The placement of shares, which put into circulation only 12.5% ​​of the capital, was “the event of the year” for Oliver Blume, who is also at the head of the Volkswagen group. With it, Porsche managed to capture 16,000 million euros for the group.

According to the consultancy Brand Finance, Porsche is the most valuable luxury brand in the world, above Louis Vuitton and Gucci. And, as Rodríguez points out, with a few exceptions, “what has pulled the Stock Market in recent years has been luxury and technology.” For the analyst, the case of Porsche is an exception within the Frankfurt Stock Exchange, “because it forms part of a discourse that is an exception within the DAX”, highly dependent on capital goods. The index does not have, in addition to Mercedes, large values ​​associated with luxury, as other parquets do, such as the Paris Stock Exchange.

Electrification

For the next few years, the company founded by Ferdinand Porsche will have to focus, like its peers, on the mandatory green transition of the sector in Europe. Porsche has become one of the main spearheads of the industry’s resistance to the ban on combustion engines, which is scheduled for 2035. Germany, influenced by Porsche – which is a leader in investment in the development of green fuels – he initially imposed a veto on the measure, which he eventually lifted. With one exception: the e-fuels (carbon neutral synthetic fuels). “E-fuels are a complement to electric vehicles in the mobility of the future. Therefore, it would be a mistake to prohibit technologies such as combustion engines ”, defends the CEO of Porsche Ibérica. All in all, the brand has managed to position itself in the electrical sector: it is the European manufacturer with the highest proportion of electric models among its sales (11%), with 34,801 units sold of the Porsche Taycan. It will be joined by other models in the coming years, point out from the company, which expects 80% of its sales to be electric by 2030.

“Porsche has shown that the image of the supercar gasoline, large engines and noise is not true: you can be a high-performance sports car and electric”, says Juan Felipe Muñoz from Jato. Ferdinand Porsche, who was a visionary in many ways, said that “the last car to be built will be a sports car.” He lacked a nuance: it will also be electric.

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