Earlier this year, Porsche AG, headquartered in Stuttgart and owned by Volkswagen AG, which is itself majority-owned by Porsche Automobil Holding SE, was cautious whether it would deliver on its goal of a 15% pretax profit margin because of slowing growth in China, turmoil in emerging markets, and a shift toward cheaper cars. However, a weaker euro makes Porsche cars cheaper in many foreign markets. Although Porsche hedges 20 currencies, those that are unhedged are translating into higher profits especially those from the U.S. and China (U.S. is the single largest market for Porsche high performance sports cars but China is expected to get the #1 spot by 2016).
Porsche’s margins have come under pressure, falling from 19% to about 15% largely because of its SUVs (Macan and Cayenne) which have much lower profit margins but account for 58% of the company’s sales. This is in contrast to the 911, Boxster, Cayman and Panamera sports cars which have much higher profit margins.
At the Frankfurt Motor Show in September 2015, Porsche will unveil an exclusive arrangement with Apple Inc. to launch an updated version of its 911 sports car, with new engines and a new communication system. The new 911 will come with Apple’s CarPlay preinstalled. CarPlay is an in-car information and entertainment system that allows drivers to use their favorite iPhone apps such as iTunes and iPhone contacts on their car’s dashboard computer.
Porsche remains an all-round winner – a proven winner on the tracks, a thrill-provider for its drivers, and a darling stock for its investors.
For more details, read the following Wall Street Journal article (may require subscription)