Porsche earlier this month ran up the white flag, agreeing to become fully integrated into the sprawling Volkswagen Group and thus marking the end of the former sports car company鈥檚 days as a small, independent, family-controlled auto maker.
Now Porsche is part of a big, family-controlled conglomerate 鈥� the Piech-Porsche family still owns 50.7 per cent of Volkswagen鈥檚 common stock. What鈥檚 ahead? Products. Plenty of new products are coming, starting almost with the new 2013 Boxster, followed in the fall by the Cayenne diesel SUV.
The biggest planned product announcement, however, comes in November. Porsche will unwrap the all-new Cayman coupe at the Los Angeles auto show 鈥� a world debut. Some reports suggest Porsche has plans to grow to as many as 10 model lines from the current five.
But we鈥檙e getting ahead of ourselves. The Porsche-VW agreement announced earlier this month and scheduled to be completed August 1 is the culmination of a wild story of corporate intrigue, risky deal-making, family feuding and grand scheming undone by a global financial crisis. It began in 2005 when Porsche quietly 鈥� no secretly 鈥� embarked on a daring scheme to take over the much larger Volkswagen Group. Audacious? No doubt. VW was big seven years ago and today it鈥檚 even bigger -- comprised of some 12 brands, from VW鈥檚 mainstream models to luxurious Audis, to monstrous Man and Scania commercial trucks, budget-minded SEATs and Skodas and even Ducati motorcycles, with a little piece of Suzuki thrown in for good measure.
But in the heady days of 2005, then Porsche-CEO CEO Wendelin Wiedeking began a run at VW by quietly buying up VW stock. VW鈥檚 chairman then and now, Ferdinand Piech, was also a Porsche board member and Automotive News reports that the grandson of Ferdinand Porsche 鈥渟at on both sides during a seven-year battle for control between VW and Porsche.鈥� That is, he knew of Porsche鈥檚 plans but remained silent, claiming he did not want to affect VW鈥檚 share price while the stock trades were in in play.
Unfortunately for the Porsche side, the 2008 financial crisis left Porsche saddled with more than $10 billion in debt and unable to borrow more on frozen money markets. Undone by global events and with no way to fund the takeover鈥檚 conclusion and support existing debt obligations, Porsche flirted with bankruptcy. That created an opening for VW to turn Porsche鈥檚 plan on its head. With no other options for survival, Porsche succumbed to VW.
But shed no tears for the major players. Wiedeking left a rich man, exiting Porsche with a massive separation package even though his debt-supported run at VW nearly sank the company. Meanwhile, Piech, as Automotive News and so many others have noted, trumped his cousin, Wolfgang Porsche, who at the time was chairman of the Porsche board. Word is that the two do not get along particularly well, and never did.
What a delicious story. The end finally came July 4. VW will absorb the remaining 50.1 per cent of Porsche on Aug. 1, making VW the sole owner of Porsche. The price: VW will pay Porsche SE 4.46 billion euros, with about half of that to be used to pay off bank debt, the rest to fund future products and so on. There are more wrinkles to the deal, but make no mistake, Porsche will become a VW brand as much as Audi, SEAT, Skoda and the others. VW is in charge.
"Porsche and Volkswagen belong together," VW CEO Martin Winterkorn said at a press conference announcing the deal.
The next chapter in this saga is all about turning Porsche into a high-volume player. The days of Porsche being merely a sports car company have been long over, anyway. Porsche, reports Automotive News citing a German car magazine, plans not only to flesh out its existing lineup of Cayennes, Boxsters/Caymans, 911s and Panameras, but also develop a small sedan to compete with the Mercedes-Benz E-Class and CLS coupe. That would represent a sixth model line, following the arrival next year of the fifth one, the Macan compact SUV.
The trade publication also suggests that within Porsche there are discussions about launching a Ferrari-fighting, two-seat, mid-engine super sports car with a V-8 biturbo and more than 600 horsepower. A small roadster had also been under consideration, though plans are on hold for the time being. Porsche certainly must expand its lineup to meet the company鈥檚 stated goal of just about doubling global sales to 200,000 by 2018.
All of this begs the question: What is Porsche now and what might it become? The short answer is a full-line luxury brand with an emphasis on SUVs, not sports car. Consider the numbers: through the first quarter of this year, Porsche sold more than twice as many Cayenne SUVs (14,867) as rear-engine 911 Carrera sports cars (6,536), even though 911 sales were up 37.6 per cent around the globe.
Porsche earns the biggest bucks on SUVs and to a lesser extent Panamera hatchbacks (7,467 in the first quarter). Porsche sold a piddling 1,361 Boxsters and Caymens in the first quarter, though that number is slightly misleading because the new Boxster had yet to hit showrooms as the old one was phased out.
For hard-core Porschephiles, this is all so very worrisome. They fear for the future of the brand, noting the purity of their beloved sports car company has already been sacrificed on the altar of profits and growth. They decry the fact of Porsche today, that it has become nothing more than an ambitious German car company that stuffs bags to overflowing with money made selling trucks.
My take is that if Porsche鈥檚 plans for growth lose traction or even go into the ditch it will surely be the result of overly ambitious growth targets and, of course, arrogance. Could that happen? Porsche鈥檚 leadership says no, that they understand the secret to success is to create vehicles with a combination of rationality and pleasure. It鈥檚 hard to argue the point.
True, every Porsche is a serious driving machine, yet according to the company, about 70 per cent of all the Porsche vehicles ever built are still on the road. They go fast and they last. Indeed, in the most recent J.D. Power and Associates 2012 Vehicle Dependability Study, Porsche was No. 1 among European car brands and the 911 was ranked tops in its segment.
Still, as of August 1 it will be merely another brand in the large VW stable. That will change things, without a doubt. There鈥檚 something just a little sad in that. And if you鈥檙e a Porschephile to the bone, something slightly worrisome, as well.
