German luxury carmaker Porsche anticipates a slight dip in profit margins for 2024. This strategic move prioritizes the launch of four exciting new models: the redesigned Panamera sedan, the electric Taycan variant, a revamped Macan, and a mystery sports car aiming to recapture Porsche’s golden era. These launches come as European carmakers brace for tougher times. The Volkswagen-owned (VOWG_p.DE) company is now targeting an operating return on sales between 15-17% this year, falling short of analyst expectations (average 17.4%) and down from 2023’s 18%.
That’s a massive shift for Porsche, which had become the epitome of the “cool” car brand. Its sports cars were legendary for their ability to rip through corners and effortlessly hit 200mph. They were coveted by the rich and famous – James Dean drove a Porsche 550 Spyder, for example – and often sold for $5 million or more today.
But when Wiedeking took over the company in late 2006, Porsche was teetering on death’s door with a market cap of less than $400 million. By the end of his tenure, Porsche had a EUR32 billion-plus market cap, and Porsche was again a brand that could stand proudly on its own two feet.
David: The way that he managed that turnaround was utterly remarkable. He brought in a whole new team, shook things up, and made significant changes to the business. But the biggest thing that he did was to start building SUVs. That was a massive risk for a brand like Porsche, and it wasn’t an easy transition. But they did it by designing the car around what customers needed, valued, and were willing to pay for – in other words, they designed the vehicle to fit its price point.
Ben: And that’s what we saw with the Cayenne. It was a very successful model that made a lot of sense for the Porsche brand and did work out in a big way. It was a great model that helped change the narrative about Porsche and SUVs.
The fact that they now have a robust and powerful SUV portfolio is also a testament to what Wiedeking accomplished with the Porsche brand when he came into the picture.