Thursday, August 17, 2006

The Porsche Strategy

Almost a century after its founder started designing automobiles, Porsche is still going strong. That is the result of a premier cure for a mid-life crisis similar to Harley-Davidson.

Porsche's lineup includes four model lines:
  • the Boxster
  • the 911 models,
  • the Cayenne SUV
  • the Carrera GT.

If these vehicles are too expensive, Porsche also offers watches, luggage, and tennis rackets bearing its name. Descendants of the founding family still control the company and these days it has enlarged its area by offering consulting services to other companies involved in auto and furniture manufacturing, mechanical and electronic engineering, and construction.

Over the years, Porsche transformed itself from serious money-loser into one of the most profitable car companies in the world. All of this while other car manufactures toil over cash incentives, market share and strategies for the Chinese market.

Porsche has constantly rolled out new products and despite the costs and risks it has quadrupled its annual unit sales in just under a decade. The most recent debuts are the Boxster and the Cayenne. And so far, the key to their success seems to be the long product life cycle.

The company intends to maintain this strategy.

Wednesday, August 16, 2006

Porsche Boxter built in Valmet

In 1998, Porsche realized that if they wanted to sell more Boxsters, they needed to produce more cars. To do so, they contracted with a plant in Finland called Valmet because the plant in Zuffenhausen couldn’t handle the increased production.

The initial plan was for Boxster to be produced in Finland for only two years. Everybody thought that by that time the demand in Zuffenhausen would decrease so that plant could handle all production. But the Boxster demand remains high, and so does the one for 996, so against all expectations the plant will remain busy for the foreseeable future. Zuffenhausen can assemble 30,000 cars per year, so the only way the Boxster would be moved entirely to Finland is if Porsche could sell the better part of that many 996s. In the short term, that isn’t likely to happen though. Most of the cars destined for North America are built in Valmet.

It became impossible to specify where a car was built. Even ordering Tourist Delivery did not force a Stuttgart build. Apparently some cars are shipped from Finland to Stuttgart for Tourist Delivery.