Porsche profits rise – but not on cars!

Porsche has revealed huge profits - the Cayenne helped, but the vast majority was gains on VW shares!

It’s long been accepted that Porsche is amongst the most profitable car makers in the world. The quality, and probably more importantly, the perceived quality of their cars, allows them to get away with charging prices that other manufacturers couldn’t possible get away with. A good example is the Cayenne. Under the skin it’s a VW Touarag or an Audi Q7, but with a new skin, and a bit of Porsche magic, it becomes a much more premium car. Which is why the Cayenne, which now has a diesel version and has sold more than 250,000 units, has been such a cash cow for Porsche.

But much of the quality image is justified. And Porsche, despite its at times somewhat indifferent dealer network, does, in our experience, work hard on the quality part of the equation. Our own long-term Cayenne is a good case in point. It developed a small oil leak. The local dealer put it down to a leaking core plug. Simple fix, you would think. But Porsche don’t supply core plugs for the Cayenne, for the simple reason they never expect them to fail. So what did Porsche do? They gave us a brand new Cayenne to play with whilst the whole engine in our car went back to Stuttgart to work out why the leak happened. And to ensure it doesn’t happen in future. Attention to detail. Makes a big difference.

But times are tough, and even Porsche has seen a 20-odd % drop in sales. So why the big jump in profits? Simple, Porsche has shown every hedge fund in the world how to play the market, and has made some €6.8 billion on VW shares during its takeover a few months ago. So it’s not a scenario likely to be repeated, but the extra revenue raised, coupled with renegotiated borrowing agreements, puts Porsche in an extremely strong position in a poor market place.

However, Porsche still made an operating profit on cars of some €500 million, which is not to be sneezed at. And at a time when sales on the mid-engined Porsches are at an all time low, mainly because customers where waiting for the latest versions, the profits Porsche has managed are all the more commendable.

The boys from Stuttgart do have a habit of coming out on top.