Why Porsche weighs so much for its IPO?
The Porsche IPO caused a lot of ink to flow. We’ll add an extra piece, but it won’t tell you whether you should buy or not. It’s not our specialty. What we are going to tell you is a success story that you have hardly read elsewhere and that forms the basis of a good reference in the sector.
Porsche is traditionally associated with the model 911. The brand sells this sports car since 1964, and while she remains an icon, a lot has happened within the company. Besides the well-known soap opera of ownership with Volkswagen, Porsche has achieved significant milestones over the past 20 years. It was during this period that the brand was finally become a major global player and no longer just a niche car manufacturer.
From 50,000 to 300,000 in 20 years
Twenty years may seem like an eternity in the automotive industry, but not when it comes to a sports car brand like Porsche. She managed to go from sales of approximately 50,000 units per year in 1999 just over 300,000 units in 2021. Their overall volume only fell twice between 2002 and 2021: in 2008, when the financial crisis hit the US economy, and in 2020, when the pandemic forced dealerships to close.
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No other brand of luxury segment does not know a growing so fast. You might think Tesla, but it’s actually a very different case, in a different price range. JATO data shows that the average price of a Porsche in Germany is 114% higher than the average price of a Tesla. In China, the gap increases to 316%, while in the United States, the German car is 24% more expensive than the American electric car.
The reader can also look back on the successful career of German premium brands. They, too, have seen strong rises in recent years, but, as in the case of Tesla, they are not direct rivals of Porsche. For instance, the average price of Porsche available in Germany in the first half of 2022 was 129,848 eurosversus 68,862 euros for Mercedes. That’s 89% more. This is the same gap as in the United States and slightly more than in China, which is 81%.
An excellent positioning
Porsche is probably the only automaker that Positioned between traditional premium and super luxury/super car brands. With few exceptions, its cars are not direct rivals to sedans from Mercedes, BMW or Audi, and at the same time they do not compete with luxury supercars from Rolls-Royce or Ferrari. Maserati could be the other case, but with opposite commercial results.
This positioning allows Porsche to be probably the Volkswagen Group’s strongest brand. It is attractive and exclusive, but without being a niche brand. Porsche’s unique positioning is also the ideal framework for electrification innovation without having to deal with price issues and without damaging the image of a brand of super cars, as is the case with Ferrari, for example.
The brand’s customers are not as cost sensitive to electrification as those of Audi, BMW and Mercedes and, at the same time, are not as dependent on petrol as Ferrari customers. This makes it easier to switch from petrol to electric, and the Taycan is the best example of this. The model is selling quite well and has not affected the image of the brand.