Porsche aims for growth in the luxury segment

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From a position of strength, Porsche continues to thrive: The Stuttgart-based sports car manufacturer is benefiting from global demand trends for exclusive, electrified luxury vehicles. For the full year 2022, the company is aiming for a turnover of between around 38 and 39 billion euros. At the same time, Porsche continues to focus on high-quality and exclusive products, electromobility and sustainability by combining its rich history and motorsport DNA with the future, redefining the concept of modern luxury.

“Porsche is a global and iconic luxury brand. We are 100% sports cars and 100% luxury,” Oliver Blume, Chairman of the Board of Porsche AG, said on Monday during his capital markets day at the center. research and development center in Weissach. “As an exclusive sports car manufacturer benefiting from the economies of scale of our cooperation with the Volkswagen Group, we are at the heart of the luxury automotive industry. This translates into structural growth opportunities for us.” With a passion for design, performance and the highest quality, Porsche is fulfilling the dreams of sports car fans around the world more than ever, he says. Blume announced that the product range will be expanded: “We plan to add a new fully electric luxury SUV model to our attractive portfolio, which will roll off the production line in Leipzig. This will further strengthen our position in the automotive segment. We particularly target higher margin segments and thus aim to exploit new sales opportunities.

Ambitious prospects
For the current financial year 2022, Lutz Meschke, vice-president and member of the management board in charge of finance and IT, gives ambitious prospects: Porsche is aiming for revenues of around 38 to 39 billion euros and a return on sales of around 17 to 18 percent. This is based on the expectation of continued currency tailwinds. In addition, the outlook is subject to assumptions such as no deterioration in economic conditions or further disruptions to supply chains.

Porsche has also set itself the long-term ambition of achieving a sales return of more than 20%. In this way, the company wants to consolidate its position among the most profitable car manufacturers in the world. “Beyond our medium-term targets, we are targeting further growth potential, particularly with regard to our levels of profitability. Porsche can look to the future with optimism from an impressive luxury position.” Meschke.
Porsche, like its peers, has experienced supply chain problems over the past three years due to, for example, the Covid-19 pandemic, the shortage of semiconductors and the war in Ukraine. However, during this period, Porsche has benefited greatly from its strong relationship with the Volkswagen Group, its long-term relationships with its suppliers and, above all, its high degree of flexibility and its ability to adapt to situations. difficult. Meschke: “We are monitoring developments carefully so that we are ready to react and adapt if necessary.”

Porsche redefines modern luxury
The term modern luxury does not only apply to the products, but to the whole company. Meschke: “We see sustainability holistically: economic, ecological and social. It is important for us to take responsibility and be socially involved.” A comprehensive understanding of sustainability is an integral part of Porsche’s strategy. In this regard, Porsche is setting itself particularly ambitious goals, including its ambition that more than 80% of its vehicles delivered by 2030 will be BEVs. The next step on this path will be the market launch of the all-electric Macan. Additionally, Porsche’s ambition is to work towards a net-carbon-neutral value chain in 2030, including a net-carbon-neutral use phase for future BEV models. To this end, Porsche systematically advances plans for the future.

Launching a new Porsche model family always takes courage: the best examples are the Cayenne (2002), the Panamera (2009), the Macan (2013) and, more recently, the first fully electric sports car, the Taycan (2019). Oliver Blume: “The Taycan is 100% electric and 100% Porsche. This combination excites people. We are continuing our electric offensive: by the middle of the decade, we want to offer our 718 mid-engine sports car exclusively in all electric forms.”

Structural Growth Opportunities
In executing its strategy, Porsche was able to achieve further milestones in 2021 – despite a very difficult environment characterized by the current Covid-19 pandemic and semiconductor bottlenecks: delivery of more than 300,000 vehicles and revenue generation of €33.1 billion. Both are historic highs for Porsche. Taycan deliveries alone more than doubled to 41,296 units in 2021. At the same time, Porsche achieved high profitability: Porsche AG Group operating profit rose 27% year-on-year to reach €5.3 billion (2020: €4.1 billion). This corresponded to a return on sales of 16%. Automotive EBITDA margin was 24.5% and Automotive net cash flow improved to nearly €3.7 billion (2020: €2.2 billion ).

According to expert studies, the luxury car market is expected to experience robust growth in the coming years, with battery electric vehicles (BEVs) and sport utility vehicles (SUVs) notably being the major growth drivers. Porsche is thus active in market segments that suggest significant growth potential for the future.

“We are very well placed to take advantage of these trends. Porsche is a leading player in the sports SUV market and in the all-electric luxury car segment,” says CFO Meschke. “Although we are clearly positioned in the luxury automotive segment, we benefit from significant economies of scale,” adds CEO Blume.

New customer groups in sight
Porsche’s portfolio is developing in a very attractive environment: “The demand for our vehicles is robust and the number of potential customers continues to grow,” says Meschke. Throughout the world, the company is well positioned: Europe, North America and China contribute approximately equally to total deliveries. Looking ahead, Porsche expects its customer base to include younger and more heterogeneous next-generation customers. At the same time, the proportion of women in this customer group is expected to increase. Besides Europe and the Asia-Pacific region, the sports car manufacturer is mainly focusing on the United States and emerging markets for its geographical expansion.

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