Porsche Eyes Global Expansion

Premium German brand Porsche, a subsidiary of Volkswagen (VW), has announced that it is to expand its global dealership network around 33% by 2018, chiefly on the back of strong expected growth in emerging markets. BMI has long maintained that international auto manufacturers, particularly in the premium segment, will increasingly seek to target higher-growth emerging markets, which will become ever more important parts of global company strategies.

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. A number of international auto manufacturers have invested in China, and we expect to see commercial interest ( see our online service, October 23 2012, 'Ford In It For The Long Haul') in the country continuing.

Porsche And VW

Porsche plans to increase global sales to 200,000 units annually by 2018, the same year its parent company VW plans to become the world's biggest auto company. BMI believes that strong sales growth in emerging markets will be key to achieving these sales targets.

In August 2012, VW completed its acquisition of Porsche ( see 'Porsche And VW Finalise Merger', July 6 2012). At the time, we said 'following the injection of capital into Porsche to clear bank liabilities and increase supply chain investments, BMI believes the company is well placed to continue to see high growth'. This latest investment announcement is the result of such capital injections, and we continue to believe that the takeover will help Porsche expand its global sales.

We also said the merger 'will allow Porsche and Volkswagen to capitalise on the continuing strong growth we are witnessing in the global premium sector, particularly in emerging markets'. We expect these views to continue playing out in line with Porsche's investments and longer-term growth strategy.

In 2012, VW was particularly reliant on its premium subsidiary Audi for increases in revenue, and we expect the brand to remain important for VW, although we believe it will experience a slight slowdown in sales in 2013 ( see 'VW Expects Operating Profits To Stagnate in 2013, February 25). Over the longer-term, we believe VW will be less reliant on a single brand for the majority of its revenue, and the company will experience strong sales growth across much of its business operations. Strong global sales growth from Porsche will help VW achieve this.

This article is tagged to:
Sector: Autos
Geography: Global

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