Porsche Maintains Course Despite Headwinds in First Three Quarters of 2024
Porsche sales revenue is down versus 2023, but things might change in the last quarter of 2024.
Luxury automaker Porsche AG is weathering a challenging economic environment in 2024, as the company’s ambitious product renewal strategy and market headwinds impact its financial performance through the third quarter. Despite posting lower numbers compared to the previous year, the Stuttgart-based manufacturer remains confident in achieving its full-year targets, highlighting the company’s resilience in turbulent times.
The first nine months of 2024 saw Porsche’s group sales revenue decline to €28.56 billion, down from €30.13 billion in the same period last year. The company’s group operating profit experienced a more significant decrease, falling to €4.04 billion from €5.50 billion, while the operating return on sales contracted to 14.1% from 18.3%. Automotive net cash flow also saw a substantial reduction, dropping to €1.24 billion from the previous year’s €3.39 billion.
Lutz Meschke, Deputy Chairman and Board Member for Finance and IT, drew an apt parallel between the company’s financial performance and racing, noting that “every race track has slower and faster sections.” He expressed optimism about the fourth quarter, suggesting that Porsche is poised for a strong finish to the year.
The company’s performance must be viewed in the context of its ambitious product strategy. In a remarkable display of operational capability, Porsche has undertaken the comprehensive renewal of five out of its six model lines within just a few months. This aggressive refresh positions the company with its youngest product portfolio in years, setting the stage for strong future growth.
The success of this strategy is already evident in some segments. The Cayenne, launched in late 2023, has demonstrated impressive momentum with a 21% increase in deliveries during the first nine months of 2024. The company has also begun deliveries of its new all-electric Macan, following successful launches of updated Panamera, Taycan, and 911 models.
However, Porsche faces significant challenges in key markets. The company delivered 226,026 vehicles in the first three quarters, down 6.9% from 242,722 in the previous year. China, in particular, presents a complex challenge with what the company describes as a “structural shift in demand.” Additionally, the global transition to electric vehicles is progressing more slowly than initially anticipated, prompting Porsche to review its product lineup, ecosystem, and cost structure to enhance flexibility and resilience.
Despite these headwinds, Porsche maintains its full-year forecast for 2024, contingent on stable framework conditions. The company projects sales revenue between €39 and €40 billion, with an operating return on sales of 14 to 15 percent. The forecast also includes an automotive net cash flow of 7 to 8.5 percent and an automotive EBITDA margin of 23 to 24 percent. The company expects its battery electric vehicle (BEV) share to reach between 12 and 13 percent.
The maintenance of these targets is particularly noteworthy given the challenging macroeconomic environment, which includes various geopolitical tensions, potential supply bottlenecks, and inflationary pressures, especially from suppliers. Porsche continues to invest heavily in innovation, digitalization, sustainability, and future product development while maintaining its focus on brand strength and customer satisfaction.
Porsche’s approach to these challenges reflects its ‘value over volume’ strategy, particularly in the Chinese market. This strategic positioning, combined with its comprehensive product refresh and maintained financial targets, suggests a company focused on long-term sustainability rather than short-term gains. As the year enters its final quarter, all eyes will be on Porsche’s ability to accelerate through what Meschke called the “final sprint to the line.”
About the Author
Subhash Nair Written work on dsf.my. @subhashtag on instagram. Autophiles Malaysia on Youtube.
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