With the Macan set to become Porsche's best-selling model in 2015, the company that was previously famous for building sports cars is likely to generate more than 30% of the Volkswagen automotive division's overall operating profit in 2015.
IHS Automotive perspective | |
Significance | In the first five months of the year, Porsche deliveries have risen by 30.3% year on year to 93,000 units, largely thanks to the new Macan compact SUV. |
Implications | This highly impressive sales uplift will further consolidate Porsche's position as one of the Volkswagen (VW) Group's main cash generators following the full formal integration in 2011, and puts even more starkly into contrast the relatively poor financial performance of the VW passenger car brand. |
Outlook | Porsche is well on target to sell more than 200,000 units in 2015 and will no doubt generate a significantly larger operating profit than last year's figure of EUR2.7 billion (USD3.0 billion), which was already in excess of the EUR2.5 billion that the VW passenger car brand generated despite the latter unit manufacturing more than 25 times the number of cars of Porsche. |
Porsche's importance to the Volkswagen (VW) Group as a profit generator and cash cow looks set to increase in 2015 as the company looks on target to comfortably set a new sales record of more than 200,000 cars for the first time. The famous brand sold more than 20,000 cars in May, for the second month in a row, with sales rising by 24.6% year on year (y/y) to 20,582 units, according to a company press release. This was a slight slowdown on the extremely accelerated year-to-date (YTD) growth rate, which stood at 30.3% y/y in the January to May period with 93,153 units. Commenting on this headline, Bernhard Maier, member of the Executive Board, Sales and Marketing, of Dr. Ing. h.c. F. Porsche AG, said, "We have again exceeded our target figures in May," adding, "In particular, we were able to boost sales significantly in the Chinese market and in Europe."
The performance in China was a particularly impressive show by the brand after sister brand, and the country's leading premium car maker, Audi posted its first decline in the market since February 2013 with a 1.6% fall and this was in stark contrast with the performance of Porsche, which posted a 70% y/y increase in the month to 5,391 units in May, which lifted the YTD increase to 43.8% y/y and 23,673 units. The brand's sales performance in Europe also rose at an accelerated rate of 19.6% y/y to 7,040 units, an increase of 19.6% y/y, which was a slowdown on the 34.2% y/y increase recorded in the first five months to 31,809 units. Sales in Germany rose 20.3% y/y to 2,721 units in May and by 28.2% y/y to 12,562 units. However, sales in the Americas fell by 2.4% y/y in May but were still up by 11.1% y/y to 20,915 units YTD.
Outlook and implications
Porsche's accelerated sales growth in May and in the first five months of the year is largely down to the success of the Macan midsized sport utility vehicle (SUV), which the firm launched in April last year. The model is set to become the firm's best-selling model this year, according to IHS Automotove's forecast, with sales of 78,000 units compared to the 67,000 forecast for the bigger Cayenne, with May's huge ramp-up in sales to China down to deliveries of the model in the country after an initial focus on fulfilling orders in Europe and in the United States. The model has the potential to boost Porsche's bottom-line earnings considerably as the hardware for the Macan in terms of the architecture and the base powertrain ranges come from Audi's Q5.
Although Porsche has the development base for the model provided from the VW Group, it is able to charge significantly more for the Macan due to its Porsche-enhanced driving dynamics, higher performance levels, and the fact it has a Porsche badge. The Macan having its first full sales year in 2015 should further propel Porsche's bottom-line earnings well north of the already extremely positive earnings result it posted in 2014 of EUR2.7 billion from sales of 187,000 units. This saw Porsche generate an operating profit of EUR14,500 per vehicle manufactured and contrasted with the VW passenger car brand's operating profit of EUR2.5 billion from sales of 4,583,000 units (not including VW passenger cars manufactured by the unit's joint venture in China. This meant that the VW passenger car only generated EUR540 per car sold in 2014. Porsche is set to become even more important, therefore, this year to the group's overall profit component, especially as the VW passenger car brand is currently experiencing declining sales, while the company is currently looking to implement a cost-saving plan to improve competiveness with EUR5 billion of cost savings implemented at the firm's main brand by 2017. IHS forecasts that Porcshe sales will rise by 18% y/y in full-year 2015 to 221,000 units.