Porsche Building Momentum In Key Markets

German premium auto manufacturer Porsche registered global sales growth of 22.8% year-on-year (y-o-y) in December, to 14,855 units. Over the full year, the company has a seen sales increase of 14.9% y-o-y, to 162,145 units. As the table below shows, there has been stark variation in the pattern of sales growth, with the company reporting sharp increases in many emerging markets, in line with BMI's core view. We expect the company to register strong sales growth in 2014 and for these regional trends to continue.

Recently launched models have helped drive global sales for the company. Porsche is to release several new or updated models in 2014, including one in the popular SUV compact-crossover segment, and this should help drive increases in registrations over the year. Furthermore, the firm is increasingly investing in the sales and after-sales segments across key markets, such as China and the US, which should also serve to drive increases in sales volumes.

Porsche's sales in China increased 19.9% y-o-y over the year, to 37,425 units. This constitutes some 23.1% of the company's sales during this period. - BMI maintains an optimistic view on luxury vehicle sales in the country, and we believe they will continue to outperform the broader market ( see 'Positive Sales Momentum To Spill Into Early 2014', December 10 2013). In 2014, we expect to see growth of 10.2% in total Chinese passenger car sales as consumer sentiment continues to improve- this strong growth should help buoy Porsche's sales in this increasingly important market.

Europe Less Dominant
Porsche Regional Sales 2013, %

German premium auto manufacturer Porsche registered global sales growth of 22.8% year-on-year (y-o-y) in December, to 14,855 units. Over the full year, the company has a seen sales increase of 14.9% y-o-y, to 162,145 units. As the table below shows, there has been stark variation in the pattern of sales growth, with the company reporting sharp increases in many emerging markets, in line with BMI's core view. We expect the company to register strong sales growth in 2014 and for these regional trends to continue.

Recently launched models have helped drive global sales for the company. Porsche is to release several new or updated models in 2014, including one in the popular SUV compact-crossover segment, and this should help drive increases in registrations over the year. Furthermore, the firm is increasingly investing in the sales and after-sales segments across key markets, such as China and the US, which should also serve to drive increases in sales volumes.

Europe Less Dominant
Porsche Regional Sales 2013, %

Porsche's sales in China increased 19.9% y-o-y over the year, to 37,425 units. This constitutes some 23.1% of the company's sales during this period. - BMI maintains an optimistic view on luxury vehicle sales in the country, and we believe they will continue to outperform the broader market ( see 'Positive Sales Momentum To Spill Into Early 2014', December 10 2013). In 2014, we expect to see growth of 10.2% in total Chinese passenger car sales as consumer sentiment continues to improve- this strong growth should help buoy Porsche's sales in this increasingly important market.

The company's sales in the Asia Pacific, Africa, and Middle East region increased 20.3% y-o-y, to 61,534 units, over the year. A number of auto companies, particularly in the premium segment, have registered strong growth in these regions, and we expect this to continue into 2014 as demand for luxury goods continues to soar.

In the high-growth US market, Porsche registered 20.8% y-o-y growth in 2013, to 42,323 units. BMI believes that the recovering housing market and accessible credit will contribute to sustained growth in the US passenger car segment ( see 'New Products And Premium Contest Will Drive Growth', January 7). We expect premium brands to continue to outpace the market (although some of this may be from small volumes), and for these companies to better target the market in the future. In 2014, we forecast growth of 2.0% in total passenger car sales- a slight slowdown from 2013 levels due to the stabilisation of the market. The premium autos segment looks set to continue to outpace the wider market, however, based on the high level of competition in the market, and this should help buoy Porsche's sales in the country.

In Europe during this period, Porsche's sales increased 4.4% y-o-y, to 51,049 units. This is in stark contrast to the declines seen in the European Union's (EU-27) passenger car market over the year. Indeed, BMI maintains a generally bearish view on passenger car sales across Europe and we expect to see declines in many markets over the year [2014?]. Although sales figures are still in positive territory for Porsche, this represents a slowdown from strong growth in previous years. BMI has long maintained that the slowdown in passenger car sales in Europe is increasingly impacting the premium segment, although certainly to a lesser degree as it is somewhat shielded from declines in consumer sentiment and weak credit conditions. In 2014, however, we expect to see a resurgence in the region, with many markets returning to positive territory after a period of sustained declines. We expect Porsche, and other premium brands, to be able to capitalise on this growth, although volumes are still likely to remain relatively low compared to pre-crisis highs.

Global Driver Of Growth

BMI highlights that Europe is no longer the primary global driver of sales for most European premium autos companies, and growth in Asia and North America more than offsets the slowdown from Europe. In 2013, Europe constituted some 31.5% of the company's global sales figures (see pie chart); as other markets continue to outpace the region, Europe will lose its status as the primary driver of growth. BMI has previously highlighted that premium auto companies are increasingly shifting their strategic focus, and production facilities, away from Europe and towards higher growth markets elsewhere ( see 'Premium Segment Soars, But Europe Left Picking Up The Crumbs', June 6 2013).

Porsche has previously stated that it plans to increase global sales to 200,000 units annually by 2018, the same year its parent company Volkswagen (VW) plans to become the world's biggest auto company ( see 'Porsche Eyes Global Expansion', March 18 2013). BMI believes that strong sales growth in emerging markets will be key to achieving these sales targets. Porsche will invest US$200mn per year to 2018 to bring the total number of global dealerships to 1,000. It expects China to account for around 10% of this total figure.

Porsche Global Sales
2013 2012 % chg y-o-y Market Share
Europe 51,049 48,877 4.4 31.5
of which Germany 20,638 17,526 17.8 12.7
America 49,562 41,060 20.7 30.6
of which USA 42,323 35,043 20.8 26.1
Asia Pacific, Africa, and Mideast 61,534 51,138 20.3 37.9
of which China 37,425 31,205 19.9 23.1
World 162,145 141,075 14.9
Source: Porsche

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Sector: Autos
Geography: Global, China, Germany, United States
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