Much has been written about Porsche’s initial public offering (IPO). I’m offering another take, but I won’t tell you whether to buy or not. This is not my specialty. What I’m about to tell you are automotive success stories that are rarely mentioned anywhere else. And that story is the basis for good benchmarks in the industry.
Porsche is traditionally associated with the 911. The brand has been selling this sports car since 1964 and while it continues to be an icon, a lot has happened within the company. In addition to the ownership of the famous soap opera Volkswagen, Porsche has achieved important milestones in the last 20 years. It was around this time that the brand finally became a major global player and not just a specialty car manufacturer.
From 50 To 300 In 20 Years
Twenty years may seem like forever in the auto industry, but not for a sports car brand like Porsche. German companies managed to grow from sales of about 50,000 units per year in 1999 to more than 300,000 units by 2021. Their global volumes fell only twice between 2002 and 2021: in 2008, when the financial crisis hit the American economy and in 2020 , when the pandemic forced dealer closures.
No other brand in the premium-luxury segment has grown this fast. One could think of Tesla, but in reality it is a very different situation focusing on different price ranges. Data from JATO shows that the average Porsche price in Germany is 114 percent higher than the Tesla average price. In China, the gap grew to 316 percent, while in the US German cars are 24 percent more expensive than US electric cars.
Readers can also recall the successful careers of other German premium brands. They have also seen strong improvements in recent years, but, like Tesla, they are not a direct rival to Porsche. For example, the average retail price of Porsches sold in Germany through the first half of 2022 is 129,848 euros, compared to 68,862 euros for a Mercedes-Benz. That’s 89 percent higher. The same price gap exists in the United States, and in China, 81 percent.
In the Right Position
Porsche is arguably the only car manufacturer to position itself between a traditional premium brand and a super luxury/super car brand. With a few exceptions, the cars are not direct rivals to sedans from Mercedes, BMW, or Audi. At the same time, they don’t compete with Rolls-Royce or Ferrari’s luxury supercars. Maserati could be another case, but with opposite commercial results.
This positioning allows Porsche to become the strongest brand in the Volkswagen group. It is an aspirational and exclusive brand, but without being a particular brand. Porsche’s unique positioning is also the perfect scenario for electrification innovation without having to deal with price issues and without damaging the supercar brand image, as happened at Ferrari for example.
Brand customers are not as sensitive to electrification costs as Audi, BMW and Mercedes and, at the same time, they are not as addicted to gasoline as Ferrari customers. This makes it easy to switch from petrol to electric, and the Taycan is a prime example of that. It sells pretty well and doesn’t hurt the brand image.
The author of the article, Felipe Munoz, is JATO dynamics Automotive Industry Specialist