Porsche is one of the most
revered names in cars. Asking car enthusiasts to name the
brands that best exemplify excellence in engineering,
racing and design. And Porsche will be one of the names that
comes up. It has a racing heritage that can't be argued
with. It has made at least one of the most iconic sports cars
of all time, the 911 and it has a large following of deeply
devoted fans born like many German automakers, out of a
deeply dark history, Porsche has become a name respected the
world over Porsche vehicles are one of
those examples where the precision, the craftsmanship
that goes into these vehicles, and then how it's reflected in
their performance, and what they're capable of doing both at
at race levels, as well as on the street perfectly embodies
that kind of stereotypical German engineering, but it is also a changing
company. The once independent firm devoted entirely to sports
cars has become a brand within the massive Volkswagen Group, a
company with which Porsche has a long history, and it is viewed
as a kind of jewel in that portfolio. Volkswagen has other
luxury brands that range from the high end to the exotic, but
Porsche is responsible for about 25% of VW passenger car profits.
And while its fans may 1 think of sports cars what really sell
today are its sport utility vehicles. This comes at Porsche
is at another potentially pivotal juncture, electric
vehicles are coming and this time they usually innovative and
groundbreaking Porsche is playing catch up. The automaker
declined a request to be interviewed for this story.
Porsche has heritage loyalty and a long track record of
innovation competitive success on its side, but it has built
its heritage and its cars around gasoline burning engines, how
can it continue to succeed and set sportscar standards in the
electric age? The story of Porsche begins with Ferdinand
Porsche. He was an engineer Born in 1875. in Bohemia, a region of
what was then Austria Hungary, and today is part of the Czech
Republic, Ferdinand Porsche secured his place in history
when he became the designer of a people's car or Volkswagen for
Adolf Hitler. The car he designed was called the type one
but as widely known as the beetle. The actual Porsche brand
didn't form until 1948, Ferdinand Porsche founded the
company with his son also named Ferdinand but nicknamed fairy,
the first production car they designed was called the 356. It
had an engine borrowed from a beetle and tuned for better
performance, the vehicle had one of the features that Porsche
became famous for an engine placed in the rear of the car.
In the 1950s, Porsche began making its own engines and
improved the 356. It also made the 550 Spyder a road racing car
nicknamed the giant killer for outperforming larger rivals, and
the speedster, a stripped down version of the 356. In 1958, the
company built its 10,000 356 then, in 1964, the 911 the
impression the 911, made on the automotive world is tough to
overstate. It is one of the most iconic sports cars of all time.
In keeping with Porsches tradition, the 911 had an air
cooled rear engine design, it didn't have the biggest engine
but was small, light and nimble. Its starting price was $5,500.
Today, a mere $46,363 a fraction of the roughly $100,000 starting
price of today's nine elevens. Though Porsches were long known
for their rear engine cars, the company made front engine
vehicles starting in the 1970s. Porsche continued to make front
engine cars until the 1990s when it finally stopped producing
them in order to focus on the 911 and the Boxster. In 1986
Porsches global sales topped out at about 50,000 units, sales in
the US and Canada, which together were then Porsches
largest market had reached 30,471, but they drastically
fell to about 14,000 globally in 1993, and just 3713 in the US
and Canada. By the early 1990s. Porsche was in trouble. The
company turns to a group of ex Toyota workers who had formed a
consultancy to carry Toyota's legendary manufacturing
principles and techniques to other companies. Toyota's
production system famously relies on reducing waste. needed
parts are kept near workers and things are only sourced or made
as they are needed. The Toyota engineers helped the German
company slimmed down its factory operations. The result was a car
that was all Porsche but significantly more affordable
because of a factory capable of higher volume production. And
sales at Porsche began to climb again US and Canadian combined
sales were 5820 in 1994 6078 and 1995 and 7524 in 1996. By 2000,
Porsche was selling 22,412 cars in the US alone, and a couple of
years later, Porsche would reveal a vehicle that would rock
the automotive world. The Porsche Cayenne. The Porsche
Cayenne was a sport utility vehicle and Porsche was a sports
car company. Brand had only made small roadgoing racecars As
might be expected, purists baulked, the common arguments
were that Porsche was diluting its identity and perhaps even
selling out in the American auto market. SUVs had gone from being
purpose built vehicles for off roading and the great outdoors
to book your successors of the family station wagon and
minivan. Initially, the move to two SUVs
was was hotly debated. You know, Porsche has a legacy of motor
sports. It's very much in its heritage. And certainly in the
early 2000s when you think SUV don't necessarily think
Motorsports and the fear was that, you know, since they share
a lot of components with VW and Audi, specifically, that a
Porsche SUV would just be an Audi with a Porsche logo on it.
But that's not what happened. Porsche very smartly decided to
build SUVs that were more Porsche and less, perhaps
outtie. Over time, the skepticism waned, though the
Cayenne was an SUV, it was a pretty high performing one. I think it took the traditional
Porsche enthusiast by shock. What are you saying now we're
going to build a four door SUV, they designed it, they put it
through rigorous tests, and I drive a client as well. And I
will tell you, it is the sportiest SUV. If you take a two
door versus a Cayenne of the same year, yes, it's not going
to be a 911. But I can tell you it's going to be the quote
unquote 911 of its segment. In 2006, a Porsche Cayenne
placed first in the trans Siberia rally. It's a long
grueling race that starts in Moscow, Russia and ends in
Ulaanbaatar, Mongolia, the following year, Porsche Cayenne
S vehicles placed first, second and third in the race. In 2008.
Cayenne SS took the top six positions in the race. These
vehicles were modified very little from their stock
condition, Porsche was able to prove that Cayenne was not just
a luxury SUV with a Porsche badge, you could actually
perform in challenging conditions, the Cayenne and its
smaller sibling the McCaughan sold well, and SUVs now make up
60% of Porsche sales. In 2020, the brand sold 57,294 units in
the US alone, almost double the high of around 30,000. Porsche
saw in the 1980s when it was still a pure sports car company, early 1990s. They sold about
15,000 cars, you know, their legacies, the 911 sports cars
that's been built off of the beaten to begin with, but then
in the early 2000s, Porsche found an interesting strategy of
diversifying its customer demographic, namely acquiring
more female customers and penetrating China, probably the
most important auto market in the world with SUVs, and today
SUVs are about 70% of all vehicles Porsche sells, so it's
gone from about 15,000 units in the early 1990s. Today, about
300,000 units, and SUVs are 70% of those Automotive Industry analysts say SUVs have not
diluted the brand's identity 911 sports cars seem to have only
grown more expensive in recent years, they now start above
$100,000, the nine elevens and the other
cars that Porsche sold have actually maintained their price
pretty well. And the reason why is the SU v customer is a very
different person that's buying the 911. This ability to weather
challenges and overcome skeptics owes something to the legions of
Porsche fans around the world. Many brands have their
enthusiasts but Porsche inspires a kind of loyalty and devotion
that stands apart. I was one of those Porsche
people it was like, Okay, these are not just incredible cars,
but they're incredible. Everything's You know, they're
just incredible on so many levels. This can be a fascination that
begins in early childhood and continues all through life. And so the aspirational car was
always to someday have a Porsche. And I set that goal as
a kid. As a four year old on every Christmas every birthday,
it was like by the time I'm let's say I'm 30 by time I'm 30,
I'm going to have a Porsche like that was the goal. That was the
aspiration. And fortunately enough, you know, at the age of
28, I was able to make that happen with my 1987 911. One manifestation of this might
be the Porsche Club of America, a club for Porsche owners that
claims to be the largest single Mark Car Club in the United
States, with 140,000 members. So Porsche club America started in
1955, was 12 individuals that were just trying to figure out
their way of how to maintain these cars that weren't, there
weren't many on the road, there wasn't a large dealer network.
Porsche also gets high marks for reliability, customer
satisfaction, and overall quality. Consumer Reports named
Porsche its top brand and 2020. Porsche also scores highly on JD
powers vehicle dependability surveys, most recently, the
study named the 911, the most dependable vehicle for the price that you have to
pay for a lot of these high performance specialized low
production vehicles, you should be able to at the very least
expect average or better quality and reliability. But you don't
get that with a lot of brands, Porsche you do, they have got a
history of making cars that just keep going and going. These vehicles hold their value
remarkably well. I've never bought my Porsches for
investment purposes. That's never, that's never the point to
own a Porsche. But it is nice to know that many many Porsches
after a decade of ownership, the amount of value it retains, and
in some cases, their GT cars. We have owners that have bought
their car, driven it for two years, and dealers right now are
calling out and say can we buy the car back, and we'll give you
the money that you paid for it? So essentially, they've owned
that car for free for two years. That is unbelievable. The
Porsche brand is thought to be so strong, there are questions
among investors over whether it's placed in the Volkswagen
Group portfolio allows the brand to fully unlock its value. Some people have even contended
that Porsche could be worth all of the W. And the reason is
they're looking at Porsche, and they're saying, this is kind of
like a luxury company like our Mazda or LVMH, or Rolex, and
they ascribe that type of valuation to Porsche and come up
with a really high valuation. The automotive market is crowded
even at the higher end, while Porsche was an early entrant
into the luxury and high performance SUV segments many
others have followed. One reason that this doesn't worry some
analysts is that many of those new entrants are priced just a
bit higher than Porsches offerings. In terms of both
price and reputation. Porsche seems to occupy a relatively
under populated niche between big and accessible luxury brands
like Mercedes Benz and BMW and the very high end brands like
Ferrari, Lamborghini and Aston Martin even the bass nine
elevens, which are by no means cheap seem to exemplify this
they perform like supercars and reliable daily drivers at the
same time. A new kind of vehicle that first found a true home at
the high end of the market is the Eevee and Porsche has taken
notice the brand released its electric tie icon in 2019. The
TT icon is already selling about as well as the 911 Porsches.
production numbers are a decent proxy for sales and Porsche
produced about 29,450 tie cons in 2020, compared with 28,672,
nine elevens. Porsche wants to bring electrification to other
models, on its way is the electric version of the Porsche
makhan Porsches biggest seller worldwide in 2019, and second
biggest in 2020. As of June 2021, Porsche plan for half of
the vehicles it sells to be electric or hybrid by 2025. But
Porsche says it cannot and does not want to fully electrify
every vehicle. Some cars have been designed around internal
combustion engines and changing that would compromise their
character. This especially includes the 911 Porsche has
spent decades refining the 911 to perform around its rear
mounted internal combustion engine and placement of the
engine and powertrain are part of what gives the 911 its unique
driving experience. Porsche says the answer to this problem is
something called e fuel. ie fuels are made through a complex
process carbon dioxide is pulled from the atmosphere and mixed
with hydrogen and water to make something chemically resembling
methanol. That methanol is then converted into gasoline. So when
the fuel burns, it does release carbon into the atmosphere, but
it is the same carbon that was pulled from the atmosphere to
make the fuel in the first place. Thus, Porsche says the
fuel is carbon neutral and it doesn't contribute to global
warming, if you will, requires no engine modifications to work.
Porsche has already tested the fuel in racing conditions in
2020, and formed a partnership with Siemens energy and several
other energy companies. To build the world's first industrial
scale factory for making e fuels in Chile, the project called for
an initial investment of 20 million euros or about $24
million and uses technology developed by Exxon Mobil using wind power to create
synthetic petrol. And effectively they can maintain
their IC engines and still be carbon neutral. You know VW
Group plans on being 50% of all of its sales by 2030 to be fully
electric. We think certainly Porsche will likely exceed that
amount. So it'll probably be by 2030, a combination of full
electric and to some extent, e fuels, powering some of its
sports cars like the 911 moves like these are in keeping
with the carbon conscious strategy pushed by Porsches
parent Volkswagen Group. The massive German automaker, which
has a neck and neck rivalry with Toyota for the title of world's
top selling car company is making a big push toward
electric vehicle technology and other carbon reduction measures.
The ambitious pivot comes only a few years after VW Group and
other automakers were exposed for cheating on diesel emissions
tests, the bold electrification plans carmakers are committing
to have garnered some skepticism from those in the auto industry
who say consumers are still wary of Eevee ranges and charging
times but some also say that if a car company can make a big
Evie push work, it is a company like VW Group, which sells a lot
of cars all over the world. And similarly, the Porsche name
might be one that can sell e V's as high performance cars. No
doubt newcomers like Tesla might have some things to say about
that.
They looked at the market trends and realized there was money to be made?
Honestly had it not been the Cayenne, Porsche would have likely folded in the early 2000s. As great driving cars the 911, Boxster and Cayman are, there's just not enough buyers for 2dr sports cars in the market.
As a Macan and 718 owner, I understand that if it weren’t for the SUV/CUV there would be no Porsche. For those who give the cayenne and Macan shit, drive one, they handle quite well given the size and mass they are, sometimes a little too good.
I dream of the day that I can move into a Taycan Cross Turismo…
Because VW
The current inventory at my local porsche dealership:
I have a Cayman. Bought it used. The salesman was thrilled when I said it was going to be a daily driver because 90% of the 911s and Caymans they sell get driven less than 3,000 miles a year.
Porsche will never dump their sports cars. If they didn't have a 911 or Cayman their Macan and Cayenne would just be a weird cousin of the Q5 and Q7. The 911 and Cayman give the Macan and Cayenne sports car credibility and that extra step up over an Audi.