Porsche to Expand Dealership Network 33% as Line-Up Grows

Porsche AG, the Volkswagen AG unit that builds the 911 sports car, plans to expand its sales network 33 percent by 2018 as demand for upscale vehicles jumps in emerging markets such as China and its model line grows.

Porsche will invest 200 million euros ($260 million) annually to increase the number of dealerships to 1,000 outlets in five years from 750 today, Chief Executive Officer Matthias Mueller said today at a press conference at the brand’s Stuttgart, Germany-based headquarters.

The division is adding to its line-up after Volkswagen, Europe’s biggest carmaker, integrated Porsche as a brand in August. Porsche introduced revamped versions of the Boxster roadster and the Cayman sports car last year, making them lighter and faster to shore up its reputation for performance, and will roll out the compact Macan sport-utility vehicle in showrooms in early 2014.

“Our international dealership network is being expanded at a high pace,” Mueller said in a speech at the carmaker’s museum. “In China alone, there’s a new Porsche Center opening almost every month,” and the country will account for about 10 percent of dealerships by 2018 under the growth strategy.

The third-generation Cayman, which debuted at the Los Angeles Auto Show in November, can accelerate to 60 miles (100 kilometers) per hour in as little as 4.6 seconds, 0.2 second faster than its predecessor. The top speed of the updated model is 283 kilometers per hour compared with 277 kph for its predecessor.

Delivery Targets

The expansion is part of a push by Porsche to boost annual sales to at least 200,000 cars and SUVs by 2018, when Volkswagen has a target of becoming the world’s biggest automaker. Porsche delivered a record 143,096 vehicles to customers in 2012, an increase of 22 percent, it said today. Its global sales in February jumped 18 percent to 10,454 cars.

“Apart from China, we’re expanding our dealership network in important growth regions like South Korea, Brazil and Russia,” Chief Financial Officer Lutz Meschke said at the press conference.

Porsche’s operating profit last year increased 19 percent to 2.44 billion euros as sales rose 27 percent to 13.9 billion euros, with the margin narrowing to 17.6 percent of revenue from 18.7 percent.

European Risk

The division is “cautiously optimistic” about this year, when earnings will probably match the 2012 figure, Meschke said. At the same time, the European sovereign-debt crisis poses a “risk potential” for carmakers, and the region’s auto market in the mid term will remain a “major challenge.”

Volkswagen forecast yesterday that group operating profit will grow in 2014 after remaining unchanged this year from the 2012 level. Earnings before interest and taxes at the Wolfsburg, Germany-based carmaker increased 2.1 percent last year to 11.5 billion euros.

Porsche’s integration with Volkswagen gives the sports-car division “the opportunity to use existing resources, capacity and competencies together with other company brands,” Mueller said today. He reiterated that cost savings from becoming part of VW will beat an initial 700 million-euro target.

After the Macan, Porsche is considering adding two more vehicles, including a smaller version of the Panamera four-door coupe and a $250,000 sports-car to challenge the Ferrari 458 Italia. The 918 Spyder, an $845,000 limited-run hybrid supercar, will be Porsche’s most expensive model ever when deliveries start later this year.

“The Macan will lead to a tangible growth push from 2014 on and by 2018 we will reach the defined goals of our strategy,” Mueller said.

Before it's here, it's on the Bloomberg Terminal.