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Porsche in the fast lane

Vontobel Markets
9 Nov 2023 | 3 min read

It has been just under a year since the sports car manufacturer Porsche completed its IPO. Demand for high-quality vehicles remains high. In the first nine months, vehicle sales rose by 13 percent compared to the previous year. The coming year also holds some innovations in the Porsche product range.

Last fall, the time had come. An impressive selection of modern and historic Porsche vehicles lined up in front of the Frankfurt Stock Exchange building. Shortly after nine o'clock in the morning, a bell rang out from inside the building. It signaled Porsche AG's first stock market price of 84 euros. At this point in time, the company reached a notional market capitalization of 78 billion euros, the largest IPO ever carried out in Europe.

The logic behind the IPO: Porsche AG hoped for more autonomy and greater entrepreneurial freedom. The ownership structure also changed. Before the IPO, Porsche AG was owned by the Volkswagen Group. The company sold part of the sports car manufacturer to Porsche SE (a holding company of the Porsche and Piëch families), institutional investors and finally to private investors via an IPO.

In terms of products, Porsche is best known for its iconic 911 sports car. However, over the past 20 years, other models have also been introduced to meet different customer groups and to enter additional growth markets. Today, only one in six new Porsches is a 911, which shows the impressive expansion of the range.

Balance sheet after the first nine months

One key figure that provides information about the current business development of a manufacturer is the sales figures. In the first nine months, Porsche sold around 250,000 vehicles, an increase of 13 percent compared to the same period last year.

The business is divided into five sales regions: Germany, Europe, North America, China (incl. Hong Kong) and Rest of the World. The largest market, North America, grew by almost 20 percent. Europe, Germany and the rest of the world also recorded double-digit growth rates.

In China, deliveries fell by 15 percent to 60,000 vehicles. Porsche cites the challenging economic situation in China as the reason for the trend reversal.

Other models are more important than the sports car

A look at the sales figures by model also reveals the corporate strategy. The 911 model series is particularly well known, but this customer base is manageable. If a customer does not want to make a change in space, suitability for everyday use or a lower entry-level price, Porsche has five other model series in its range. These models are responsible for around 84 percent of sales.

The most popular models belong to the SUV category (off-road vehicles), which together were sold around 137,000 times, an increase of six percent. In the sports car segment, sales of the iconic 911 series increased by 30 percent, while the more affordable 718 model grew by 20 percent. Deliveries of the luxury saloon increased by 11 percent, while the all-electric "Taycan" model achieved growth of 34 percent. Porsche is aiming to achieve over 80 percent of new deliveries with fully electric vehicles by 2030. In the current year, this share was almost 12 percent.

Turnover in the first nine months rose by 13 percent to 30 billion euros. The operating result was nine percent higher and reached 5.5 billion euros. This resulted in a return on sales of 18.3 percent. CFO Meschke explained the Group's growth with higher sales as well as the positive product mix and price effects. This means that Porsche was able to sell a particularly large number of expensive and profitable vehicles.

Porsche confirms its previous targets for the year as a whole. Among other things, annual turnover is to be between 40 and 42 billion euros and an operating return on sales of between 17 and 19 percent is to be achieved. The long-term plan is to increase the return on sales to over 20 percent.

Innovations planned for four model series

Porsche has big plans for the coming year. On the electric front, one of the SUV models (Macan) is to be equipped with a fully electric drive. This step seems sensible in order to get closer to the self-imposed target for electric drives by 2030.

The Taycan, which was launched four years ago, and the Panamera luxury saloon will be presented as new editions. A slightly revised version of the 911 will also appear.

Dr. Ing. H.c.F. Porsche AG, one year daily chart

Source: Bloomberg, 08.11.2023 Note: Past performance is not a reliable indicator of future results

Conclusion

Demand for Porsche vehicles remains high. Even though sales in China have fallen, the other regions helped the Group to increase sales by 13 percent. This growth is also reflected in the increase in turnover (12.6 percent) and an increase in operating profit (9 percent).

Next year, innovations are expected in four of the six model ranges. It remains to be seen how these innovations will affect sales figures and when the Group will achieve its target of a return on sales of over 20 percent.