Porsche to raise top model prices by 20%

{"text":[[{"start":6.3,"text":"Porsche will raise the average price of its most expensive models by about 20 per cent by 2030, as the German sports-car maker aims to echo Ferrari’s strategy of using exclusivity to boost profits."}],[{"start":19,"text":"Chief executive Michael Leiters outlined a years-long plan at an investor day on Wednesday to revive Porsche’s fortunes by selling fewer but more upmarket cars following a costly unwinding of its electric vehicle ambitions last year."}],[{"start":33.05,"text":"“We want to further elevate our positioning, protect the exclusivity of Porsche and gain pricing power,” said Leiters, the former McLaren boss who took over in January. “This brand has a lot of power.” "}],[{"start":null,"text":"

"}],[{"start":45.8,"text":"The average price of Porsche’s top models will increase to more than €330,000 by the end of the decade from about €270,000 this year, while the proportion of its portfolio made up of top-end models is expected to rise to 45 per cent from a third currently. "}],[{"start":64.5,"text":"Porsche’s shift towards higher-margin sports cars and limited editions of exclusive models echoes a signature Ferrari strategy that has helped the Italian carmaker achieve an industry-beating operating profit margin of 30 per cent."}],[{"start":76.95,"text":"Porsche historically contributed outsized profits to the Volkswagen Group thanks to explosive growth in China. But its fortunes have reversed dramatically as sales plummeted in the world’s largest car market and it was hit by higher US tariffs. The company has also taken huge writedowns to reinvest in petrol models it abandoned during a major pivot to electric cars. "}],[{"start":99.1,"text":"Leiters’ strategy will result in a much smaller Porsche, with the company reducing the number of vehicles it needs to sell to turn a profit to fewer than 200,000 units. The group delivered about 320,000 cars in 2023, when it had an operating profit margin of 18 per cent, but last year its margin plunged to 1.1 per cent on deliveries of roughly 280,000 cars. "}],[{"start":122.14999999999999,"text":"The group on Wednesday maintained its target to achieve an operating profit margin of 10 to 15 per cent and an automotive net cash flow margin of up to 12 per cent by 2030. It will target a profit margin of 15 per cent by 2035."}],[{"start":138.25,"text":"Porsche is betting on a new combustion-engine version of its best-selling Macan, due in 2028, to revive its profits and offset falling sales in China. It also plans to unveil a new SUV, which will come in petrol and plug-in hybrid versions, in the same year and develop a new super-sports car to be priced higher than its signature 911 model."}],[{"start":160.7,"text":"“We are becoming more selective about where we can compete and more ambitious in the segments where we see the strongest fit with our brand,” Leiters said. "}],[{"start":null,"text":""}],[{"start":169.6,"text":"Leiters, who previously served as Ferrari’s chief technology officer, said its plan to shift sales towards more expensive, higher-margin products would be accompanied by 20 per cent cuts in product development costs and the number of model variants it makes. "}],[{"start":183.75,"text":"The company has already reached a deal with unions to cut 9,000 jobs — or roughly 20 per cent of its workforce — by 2035."}],[{"start":191.85,"text":"UBS analyst Patrick Hummel said Porsche should “comfortably” return to double-digit profit margins by the end of the decade if Leiters was successful in executing his strategy. "}],[{"start":202.54999999999998,"text":"“It’s replicating what Ferrari has been successful at. Porsche also has the potential to [sell] more at the upper end and offer more exclusivity with the right models,” he added."}],[{"start":212.95,"text":"Leiters told the FT last week that “there won’t be a 911 electric”, although the company is going ahead with the electric version of its 718 sports car next year."}],[{"start":222.89999999999998,"text":"On Wednesday, Porsche said it would aim for a two-to-one split between petrol and plug-in hybrids versus EVs. "}],[{"start":229.7,"text":"Scott Sherwood, an independent analyst of luxury car brands, said Ferrari had been able to build its strategy around “scarcity” because it only sold about 14,000 models a year. Even with the right sizing, Porsche’s scale would be much bigger, he said. "}],[{"start":245.95,"text":"“They have a major brand challenge. Porsche is a sports car brand and sports cars at supercar pricing only works with a small group of brands with the most hardcore loyalists,” Sherwood said. “It's a bit like Rolex deciding they want to go after Patek Philippe buyers.”"}],[{"start":268.15000000000003,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1791376612_4992.mp3"}