\nHow Porsche plans to grow margins with luxury and speed<\/br>
\n2023-06-29 21:52:49<\/br><\/p>\n
Porsche \u2014 with<\/span> CEO Oliver Blume behind the wheel \u2014 has zipped by a number of milestones over the past several years. Its share price has gained more than 36% since its IPO in September 2022 and profit margins are at an enviable 18%.<\/p>\n And yet, Blume isn\u2019t satisfied.<\/p>\n \u201cWe are driving the company like a sports team,\u201d Blume said earlier this month on the sidelines of the company\u2019s 75th anniversary celebration. \u201cAfter a success, focusing [on] what we can do more\u2026 going for the next goal.\u201d<\/p>\n The next goal, Blume said, is 20% margins. The road to get there will be paved with investments in new segments and maybe even a seven-figure hypercar<\/a>.<\/p>\n The last nine months haven\u2019t been kind to other automakers that went public in the past few years, particularly companies like Canoo, Fisker, Lucid Motors and Polestar that merged with special purpose acquisition companies<\/a>. Even Rivian, the 2021 IPO darling that debuted at $78 a share, has seen its price fall some 82%.<\/p>\n Porsche has managed to avoid a similar fate \u2014 a result that Blume credited to years of preparation.<\/p>\n \u201cIt was a process over years, where we developed the company,\u201d Blume said. \u201cFive years ago, Porsche would never have been able to go to the stock market, and now it was the right moment.\u201d<\/p>\n That preparation required a renewed focus on the fundamentals: margins, profits and cash flow. But, don\u2019t think all that has made the company boring. At Porsche\u2019s 75th birthday party in Stuttgart, Blume unveiled the Mission X,<\/a> a hypercar designed to be the fastest production car ever made, not the most profitable.<\/p>\n When it comes to growing profit margins, it\u2019s hard to do better than the luxury segment.<\/p>\n Though Porsche is certainly a premium manufacturer, its reputation has been built on performance, not poshness. A pivot to challenge brands like Mercedes-Benz or Rolls-Royce is not to be made lightly.<\/p>\n \u201cBefore we decide to go to a new segment, we make a deep analysis of the markets, of the profit pools and different regions of the world, and we think the segment of luxurious SUVs is quite huge, and with a very strong development potential from the future, and strong profit margins. What\u2019s missing is a very sporty one there,\u201d Blume said.<\/p>\n In other words: Buyers have many luxurious and stylish options in the premium SUV segment, but none of them has the character of a Porsche.<\/p>\n It\u2019s a similar story to what drove Porsche to introduce the Cayenne SUV 20 years ago. Though not particularly luxurious, the tall, big and wide Cayenne was a massive departure from the company\u2019s pure sports offerings.<\/p>\n Cayenne sparked controversy, with many brand purists saying that Porsche had lost its way. Far from the beginning of the end, Cayenne is now Porsche\u2019s biggest seller, while the company\u2019s portfolio of fast, desirable sports cars is broader than ever.<\/p>\n By heading to green pastures, Porsche found huge success, and now Blume hopes to do so again.<\/p>\n That next expansion is a new SUV that Blume referred to by its code name: K1. This new SUV, first mentioned in March<\/a> and due by 2027, will be bigger than Cayenne. It\u2019ll be quick, too, but the focus here is on luxury.<\/p>\n Performance will come from a fully electric powertrain, Blume said, in keeping with Porsche\u2019s goal of delivering 80% EVs by 2030. However, the look and layout of the car might be a little unfamiliar. \u201cYou will be surprised by the design,\u201d Blume said.<\/p>\n Blume also said that the K1\u2019s systems and software, the car\u2019s \u201ctechnology profile,\u201d will be unique.<\/p>\n To create innovative technologies found only in Porsches, the company is on a hiring spree \u2014 a notable difference from an industry that is laying off workers.<\/p>\n Porsche has more than 1,000 technical positions open, including many on the software side. Blume said that this is an increasingly core part of the company\u2019s identity: \u201cWe think that the IP we are developing is very specific,\u201d Blume said. \u201c100% portion of this kind of costs are important for our brand identity and for our product identities. Therefore, that is our core business.\u201d<\/p>\n For Blume, this clarifies the build versus buy debate.<\/p>\n \u201cYou can buy solutions in the market in areas, which are not your core business\u2026 And so for us it is very clear where to tap into that focus, where we will get the best talent from the market to develop our core competencies,\u201d he said. \u201cAnd in other areas, where it is not so important\u2026 we will work together with partners, but they are the best partners in the market.\u201d<\/p>\n When it comes to that core experience, Blume said: \u201cAll the touch and feel and coming up to the software experience into the car should be unique for Porsche.\u201d<\/p>\n Bringing a luxury all-electric SUV \u2014 catnip for American buyers \u2014 might make sound financial sense. However, for extremely low-volume hypercars (Porsche sold just 918 of the 918 Spyder), the value proposition is often a bit more nebulous.<\/p>\n Blume cited the brand-building impact of a record-setting halo car like the Mission X: \u201cAll our hypercars are icons,\u201d he said. But, there are some more tangible benefits, too. \u201cIn the hypercars, we show the best the company is able to develop, to produce, to show what our technologies [are] for the future. We will later bring [them] to other serial cars, and so, it\u2019s not only a showcase, it\u2019s real life, to bring innovations, to develop innovations,\u201d he said. \u201cThe whole team is focused, motivated, pushed to develop a hypercar, and that is the best the company is able to deliver.\u201d<\/p>\n Image Credits:<\/strong> Porsche<\/p>\n<\/div>\n Blume declined repeatedly to indicate whether or not the Mission X would be produced, but we shouldn\u2019t have to wait long to find out.<\/p>\n He said the decision will be made \u201cduring the next month.\u201d Should it get the green light, its first official duty will be recapturing the fastest production car lap record around the Nurburgring Nordschleife. For Blume, that iconic, 13-mile race track cut through the forests of western Germany is part of Porsche\u2019s DNA: \u201cWhen we design and build the concept of a car, the Nurburgring Nordschleife is the measure for Porsche.\u201d<\/p>\nTiming is everything<\/h2>\n
Pushing into the luxury segment<\/h2>\n
Learning from the Cayenne<\/h2>\n
Wanted: Software engineers<\/h2>\n
Mission X: To be or not to be?<\/h2>\n
![\"\"](\"https:\/\/i0.wp.com\/techcrunch.com\/wp-content\/uploads\/2023\/06\/A7R03453.jpg?resize=1024%2C683&ssl=1\")
<\/a><\/p>\n