A lot has been written about the Initial Public Offering (IPO) of Porsche. I’m adding one more piece but I’m not going to tell you to buy or not. That’s not my speciality. What I’m going to tell you is a success story that you can barely read anywhere else, and that’s the base for a good benchmark in the industry.
Porsche has been traditionally associated to the 911 model. The brand has been selling this sport car since 1964, and while it continues to be an icon, many things have happened inside the company. In addition to the well-known property soap opera with Volkswagen, Porsche has set important milestones over the last 20 years. It is during this time when the brand finally became an important global player, and not just a niche car maker.
From 50 to 300 in 20 years
Twenty years may sound like an eternity in the auto industry, but not when you’re talking of a sports car brand like Porsche. They managed to jump from sales of around 50,000 units per year in 1999 to a bit more than 300,000 units in 2021. Their global volume has only dropped twice between 2002 and 2021: in 2008, when the financial crisis hit the American economy, and in 2020, when the pandemic forced the closure of the dealers.
There is no other brand in the premium-luxury segment growing this fast. Well, you might think of Tesla, but it is actually a very different case in a different price range. JATO’s data indicates that the average price of a Porsche in Germany is 114% higher than the average price of a Tesla. In China, the gap grows to 316%, while in USA the German car is 24% more expensive than the electric American one.
The reader could also remember the successful career of the German premium brands. They have also posted strong increases over the last years, but as it happens with Tesla, they are not direct rivals of Porsche. For instance, the average retail price of Porsches available in Germany in H1 2022 was €129,848, vs €68,862 for the Mercedes. That’s 89% more. It is the same gap there is in USA, and a bit more than the gap in China, at 81%.
In the right position
Porsche is probably the only car maker that is positioned between the traditional premium brands and the super luxury/super cars ones. With some exceptions, its cars are not direct rivals to the saloons from Mercedes, BMW, or Audi, and at the same time they don’t compete against the super luxury Rolls-Royce or the super cars from Ferrari. Maserati could be the other case, but with opposite commercial results.
This positioning allows Porsche to be probably the most solid brand from the Volkswagen group. It is aspirational and exclusive, but without being a niche brand. The unique placing of Porsche is also the perfect scenario for electrification innovation without dealing with price issues and without hurting an image of a super car brand, as it happens to Ferrari for instance.
I mean, the brand’s customers are not as price sensitive to the electrification costs as they are at Audi, BMW, and Mercedes families; and at the same time, they are not as petrol addicted as the clients of Ferrari. It makes easier any shift from petrol to electric, and the Taycan is the best example. It sells pretty well and has not affected the brand’s image.
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The author of the article, Felipe Munoz, is an Automotive Industry Specialist at JATO Dynamics.