Published on August 6th, 2014 | by Daniel Sherman Fernandez0
Porsche Growing Too Fast, Can It be Bad?
Strong global demand for its products has Porsche on course to top its goal of surpassing annual vehicle sales of 200,000 by next year if not this year analysts predict, well ahead of its 2018 deadline. The sales surge, however, has some industry watchers worried that Porsche’s parent is placing too much emphasis on volume, which risks robbing the brand of its exclusivity while also raising the danger of quality problems.
Currently, those troubles aren’t pressing at Porsche, which has been an absolute steal for VW Group ever since it paid 8.4 billion euros for the equity while shouldering another 2.5 billion in debt. Porsche made an astonishing 700 million euros in operating profit in the first quarter alone.
Even if the VW brand were to have boosted its first-quarter earnings by another half it still wouldn’t have matched Porsche despite selling 26 times as many cars. In the future, Porsche likely will contribute even more than the 2.6 billion euros it provided to VW last year now that VW executives estimate post-integration synergies between the two will amount to more than 1 billion euros a year versus the previous estimate of more than 700 million euros.
Margins continue to hum along at double-digit rates, and perceived workmanship is amongst the highest in the industry.
According to J.D. Power’s influential U.S. customer satisfaction survey, Porsche came in first for the second straight year in its annual Initial Quality Study. The Boxster, 911 and Panamera all ranked at the top of their respective segments, while the Cayenne finished second only to the Lincoln MKX in the U.S.-based study.
Porsche’s Leipzig plant also took home J.D. Power’s award for the best European plant in terms of build quality. A separate J.D. Power annual survey for Germany also placed Porsche at the top.
“The acid test is customer satisfaction,” Porsche CEO Matthias Mueller said in June after the results were published. “For us, the ratings are both a confirmation as well as an incentive to continue along our path to quality growth.”