Editorial

Is Porsche On The Way To Becoming The Next Mercedes And BMW?

All of the signs point to a period of unprecedented growth for Porsche.

Elon Musk is one of the more vocal automotive CEOs when it comes to divulging how his company will enter the market and become a large-scale automaker. In short, Musk took a top down approach, beginning with sales of expensive low-volume vehicles and working his way to the masses by stepping down the ladder in price and up in sales quantity. Meanwhile, other companies like Hyundai are taking the opposite approach, introducing luxury cars into their lineups after years of selling bargain priced cars in high volumes.

Porsche, on the other hand, is taking a completely different approach. Tesla has no qualms about moving down market, but Porsche is a well-established brand that, while selling moderately for a luxury sports car company, has no interest in lowering itself to the ranks of lesser brands. Still, the trend remains. Automakers like Mercedes and BMW have been introducing more vehicles on both ends of the price spectrum with cars like the CLA and X1 giving budding professionals a taste of the good life as well as the S-Class Coupe and upcoming 8 Series for those with money and a desire for something different than what Bentley or Rolls-Royce have to offer.

As an automaker that has seen positive reinforcement from building controversial luxury sports cars that end up a success, like the Cayenne and Panamera, Porsche appears to be gaining momentum and courage, dipping lower into the price range and reaping the benefits. When the Macan hit dealership lots in 2014, it quickly became Porsche’s best selling model, raking in more profits for the automaker. All of this begs the question, is Porsche poised to eventually become a major German luxury car manufacturer on par with Mercedes and BMW? Looking at the sales numbers alone, it seems unlikely. Despite consistent growth since 2002, including a rebound by 2012 after the destabilizing crash of 2008, Porsche still only sold 51,756 vehicles in 2015.

This pales in comparison to Mercedes and BMW, which sold 372,977 and 346,023 cars respectively during the same year. In fact, one of Porsche’s closest competitors in the luxury car segment is Jaguar Land Rover, which still sold 85,048 cars in 2015. Regardless, this doesn’t mean that a bright future isn’t on Porsche’s horizon. With the Macan selling fast, Porsche is learning the virtue in selling down market. What it needs in order to take the next step to matching Cadillac or Lincoln’s 2015 sales numbers, which sit at 175,267 and 101,227 respectively, is two things. The first is a Panamera lite (or an entry-level sedan of any sort), and the second is a foray into the soon to be booming electric car market.

On the sedan front, there’s no telling what Porsche has in mind. Cars like the upcoming Panamera Sport Turismo that was seen testing not long ago are a sign that Porsche is experimenting with different variations of its sedan. In short, Stuttgart’s product planners aren’t interested in stubbornly holding up brand values, they’ll chase the money. With plenty of experience building vehicles that are smaller and more nimble than the Panamera coupled with the wealth of platforms and powertrains from the Volkswagen Group, it wouldn’t be too far-fetched to see Porsche build an entry level sedan. In June of 2016, a sedan bearing a Porsche badge that was also smaller than the Panamera that was caught testing.

This signals that the automaker may have either been experimenting with smaller sedans or is even in the process of refining one for production. Time will tell if Porsche will unveil such a car, but don’t be surprised if it happens soon. On the other hand, electrification is something that Porsche has had on its mind for some time. It has experience building hybrid variants of its non sporting models and then blew away its audience when it unveiled the Mission-E concept, an EV that has been confirmed for production, at the 2015 Geneva Motor Show. With raw statistics that rival the Tesla Model S and innovative technology sure to raise the segment’s standards, Porsche seems to be well prepared for the inevitable rise of the electric car.

Given that the Mission E’s platform is said to be highly variable to accommodate sedans, SUVs, and hybridization, Porsche seems to be setting itself up for a future where it competes head to head against the car world’s major luxury players on the electric playing field. In all likelihood, the Volkswagen group wouldn’t want Porsche cannibalizing sales from Audi, but by positioning itself as the slightly less practical yet sportier option, Porsche could put a serious dent in Mercedes’ and BMW’s sales. However, even with such huge advantages, Stuttgart still has a large mountain to climb. It would need to double its US sales to be in the same neighborhood as Lincoln and grow seven fold to mess with Mercedes.

Given the impending toss up that electrification and the autonomous revolution will have on the market, it’s possible for Porsche to land on the right side of change, but on its current trajectory, the signs are pointing to that becoming the reality.

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