Porsche (Germany)

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Porsche is the world's best-known luxury sports car marque, a name that is instantly associated with supreme automotive design. Now a wholly owned subsidiary of Volkswagen, it has defied the accepted formula of high volume production to maintain a gold-plated reputation as the definitive automobile status symbol. A key contributor to the group's success was the fact that, until recently, it was a family-controlled business. Its exceptional profitability very nearly allowed Porsche to force a reverse takeover of much larger rival Volkswagen, with whom it already had long-established historical ties. In a series of deft corporate manoeuvres in the mid 2000s, Porsche managed to become the dominant force in that massive automotive empire. Yet, the huge debts it built up in the process threatened to bankrupt the business in the subsequent global economic crisis. As a result, the two companies did indeed become a single entity, but it was Volkswagen rather than its smaller cousin that retained the upper hand in the combined business. Volkswagen took control of the Porsche sports car business, although corporate entity Porsche SE remains the combined group's biggest shareholder.

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Porsche SE
Porscheplatz 1
D-70435 Stuttgart
Tel: 49(0)711 911–0

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 17th Dec 2015: Ads of the Week "Compete". Porsche's US agency Cramer-Krasselt breaks the mould with this bold new spot for the legendary German sportscar, not previously noted for its creative advertising. With assistance from some clever digital effects, C-K puts a young Muhammad Ali in the ring against himself; Sharapova on court against Sharapova; chess champion Magnus Carlsen fighting the clock against his doppelganger; all to demonstrate that nothing beats the 911 except the new 911. Nicely done.

Adbrands Weekly Update 5th Nov 2015: Volkswagen Group's predicament took not one but two new turns for the worse, as the emissions-cheating scandal widened significantly. The US Environmental Protection Authority said it had also found cheat software in a new group of of previously undetected vehicles produced by the group, including the first Porsche models to be implicated. According to the EPA, a defeat device has also been discovered in 3.0 litre Volkswagen, Audi and Porsche cars with model years 2014 to 2016. At least 10,000 additional passenger cars already on the road in the US are affected by the new discovery, including four Audi models and the 2015 Porsche Cayenne.

Adbrands Weekly Update 30th Sep 2015: The appointment of Porsche boss Matthias Mueller as the new CEO of Volkswagen Group was the biggest of a number of changes at the embattled group, which is expected to write to car owners within the coming days offering free repairs to all 11m affected vehicles worldwide. These include multiple VW, Audi, Skoda and Seat models produced over the past six years. Bernhard Maier moves from the sales and marketing role at Porsche to take over at Skoda. New leaders will be appointed in due course at Porsche, but Mueller will continue to head that business in addition to the wider group until his replacement can be selected.

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In the hard-pressed automotive industry, Porsche continues to break the mould. Its move into the enormously competitive SUV segment has proved a massive success, enhancing an already gilt-edged reputation. Until its foray into hedge fund speculation, the business also had a profit margin of which most other manufacturers could only dream, generating huge quantities of cash. Former Porsche CEO Wendelin Wiedeking seemed to be a corporate dealmaker par excellence, building the company into the core of a huge group which - for a while - controlled not only Volkswagen but also MAN and Scania trucks. However that empire-building ultimately ended in failure as Porsche struggled to manage the huge debts it had accumulated at the same time as a global meltdown in the financial markets. The Porsche brand retains its prestige, but the corporate entity has undergone considerable change.

Porsche's performance was transformed from 2002 onwards by the introduction of the group's first SUV model, the Cayenne, which has achieved remarkable success since its launch and helped the group to double its annual unit sales by the end of the decade. In practical terms, the biggest challenge facing the brand is how to maintain its air of exclusivity in the face of overwhelming demand.

For 2016, combined deliveries of the Porsche collection to customers rose by 6% to a new record of 238,000 cars worldwide. China overtook the US as the brand's biggest market in 2015, with volumes rising by a further 12.5% in 2016 to 65,246 cars. The US managed a 5% increase to 54,280 cars, followed by Germany and Great Britain. The group has production facilities in Germany and Austria.

The Cayenne lost its lead in the portfolio to its younger compact sister, the Macan SUV, sales of which hit 80,216 cars, to Cayenne's 73,119. Together the two cars accounted for more than two-thirds of combined sales. A redesign of traditional favourite, the 911, was launched in 2015, and is now the #3 seller, though far behind the Cayenne and Macan at 31,350 units in 2015. The Panamera four-door sports coupe launched in 2009 accounted for 17,207 units, with the entry-level Boxster and Cayman trailing at 12k and 11k respectively. In 2014, the group also launched a limited edition hybrid 918 Spyder super car. It sold 301 units at around $1m per vehicle. The new horizon for Porsche will be its first battery-powered car, the Mission E, already in development.

The only cloud on the horizon for Porsche involves the emissions-cheating scandal which engulfed the Volkswagen Group towards the end of 2015. Some Cayenne units use a 3.0 litre engine which contains tainted cheat software. However Porsche has said that its own costs to fix that problem will be moderate.

Porsche has a long family association with much bigger German auto manufacturer Volkswagen. Group patriarch Ferdinand Porsche designed the first Volkswagen "beetle" car before World War II. More recently, the two companies worked together to develop the Cayenne, and VW continued to manufacture its body shell. In September 2005, Porsche announced plans for a wider-ranging strategic alliance with Volkswagen, designed to support the bigger company's financial position. Partly this was to share technical resources, not least the joint development of hybrid technology to be used on Porsche's Cayenne as well as VW Group models. More significantly however, Porsche declared its intention to acquire an initial 20% stake in Volkswagen. That plan met with considerable opposition from minority shareholders in Porsche as well as several board members of VW, who challenged the dual role of Ferdinand Piech, then chairman of Volkswagen's supervisory board but also a prominent member of the Porsche family.

Nevertheless, this opposition was outvoted and by mid-2006 Porsche had accumulated a 25% equity stake in VW, although its voting rights were for the time being capped at 20% because of a law passed in the 1950s prohibiting any single shareholder from holding a higher proportion than the government of Lower Saxony, the region of Germany where VW is located. Porsche called for this out-dated restriction to be scrapped, and after several months of opposition, Lower Saxony withdrew its objections in February 2007. A month later, Porsche issued a largely symbolic bid for the entire group. Under German law, 30% is the barrier beyond which buyers must make a formal bid for 100% of a target company's equity. Porsche's offer was well below the larger group's share price at the time, and few minority shareholders accepted that deal. However it allowed Porsche to continue adding to its VW stake without needing to increase its overall bid.

As a result, Porsche's share holding had risen to 35% by September 2008, and was expected to reach 50% by the end of the year. As stock markets began to fall as a result of the growing economic downturn, many VW investors were convinced that the larger group's share price would also fall as Porsche slowly increased its stake. Instead, the smaller company mounted a secret raid on Volkswagen's shares, acquiring an effective 74% holding at the end of October 2008 through a complex series of derivative options. This created a panic among hedge funds holding short positions on VW shares, but without the necessary stock to fulfil them. The rush to buy caused the VW share price to soar dramatically. In the ensuing mayhem, several large investors were ruined. To appease regulators, Porsche was forced to relinquish some of its own options, settling for a 51% shareholding in January 2009.

In the meantime, there was an growing rift between VW chairman Ferdinand Piech and his cousin Wolfgang Porsche, chairman of Porsche. At its heart was the comparatively simple question of which of the two corporate entities should play the dominant role in a merger of the two companies. Porsche saw his own business as the effective parent business, while Piech believed the much larger Volkswagen Group should prevail. This friction had reached unworkable levels by the end of 2008, with Piech apparently refusing to have any dealings with Porsche Group's CEO Wendelin Wiedeking, the architect of that group's creeping takeover of Volkswagen. By early 2009, the friction had begun to threaten any resulting group's future stability.

At the same time, however, the burden of debt incurred by Porsche had also begun to create problems for the smaller company. By January 2009, Porsche's net debt had risen to a weighty €9bn, higher even than its annual revenues. This created considerable concerns for the banks funding its balance sheet, given the global economic downturn, and two months later Porsche came worryingly close to default as its struggled to refinance its borrowings. As a result, the Piech and Porsche family factions called a truce in May 2009, agreeing to merge their two groups as a single company, with the terms of the precise structure to be decided by a committee. Yet those talks too had begun to fail by mid-year as Piech and Porsche argued over who would get the upper hand in the resulting business. In the end, as Porsche came ever closer to a financial meltdown, it was a battle won by Piech. Following a series of negotiations over the following months, terms were agreed for a deal whereby Volkswagen acquired a 49.9% shareholding in the Porsche sports car business for €3.9bn. At the same time Porsche transferred a further 10% stake to the investment fund of the Emirate of Qatar as well as options over a large chunk of the holding it had acquired in Volkswagen. A full merger of Volkswagen and Porsche was originally scheduled for 2011, but has been repeatedly postponed, partly because of disagreements over valuation, but also as a result of continuing lawsuits against Porsche in connection with its attempted takeover. A deal was finally agreed in 2012, whereby Volkswagen would acquire the outstanding shares in Porsche automobiles for €4.46bn.

Following the transfer of ownership of Porsche automobiles, its former corporate parent Porsche SE, retained its near-51% shareholding in Volkswagen Group, becoming in effect a pure investment company. It is once again family controlled - the Porsche family bought back Qatar's 10% investment in 2013, although some preference shares are still publicly owned.

However, in a separate side-deal, the family agree to transfer ownership of Porsche Holding company of Austria to Volkswagen AG. This was previously a separate family-owned business, even larger than the better known manufacturing business. Headquartered in Salzburg, it is the leading importer and distributor of Porsche and all Volkswagen group cars in Austria as well as several other Central and Eastern European markets. It also has retail operations in Germany (as Auto&Service), France (as PGA), Italy (as Eurocar), the Netherlands and China, making it the largest single dealership group in Europe. Revenues for 2015 were €18.8bn.


Porsche group revenues for the year to July 2008 reached a record high of just under €7.5bn, while net income reached an astonishing €6.4bn. In fact, pretax net income of €8.6bn managed the extraordinary feat of actually exceeding turnover, entirely as a result of sophisticated hedging of the company's investment in Volkswagen. That performance came crashing down to earth the following year. Consolidation of its share of Volkswagen Group revenues allowed Porsche to report hugely inflated revenues of €57.1bn, but more seriously a net loss of €3.6bn.

Common sense prevailed once again for the year to July 2010, as the newly slimmed-down company reported revenues of €7.8bn, up 18% on a comparable basis, without the inflated effects of hedges and financial trading. Net losses improved to €454m, largely as a result of accounting adjustments relating to writeoffs of its investments in Volkswagen. The company reported operating profits before these adjustments of almost €1.2bn. Porsche Automobile Holding changed its reporting year to bring it into line with Volkswagen, but its financial position was to a large extent obscured by the unwinding of the extraordinarily complex inter-company investments. Net profits were €37m after a €4.37bn charge against valuation of its options to sell its shares in Volkswagen.

For 2013, its first full-year under Volkswagen control, the Porsche operating business, Porsche AG, reported revenues of €14.33bn, up 3% on the year before. Net profit rose 6% to €1.94bn. For 2014, revenues leapt by 20% to €17.21bn while net profit was up 14% to E2.20bn.

Revenues for 2015 jumped by just over 25% to €21.53bn; net profit rose by a more modest 6% to €2.34bn. However, Porsche remains the world's most profitable car company with a margin of almost 16%.

Porsche AG retains a 65% shareholding in Porsche Design Group, which designs and licenses a huge variety of products ranging from bathroom fittings and architectural products to personal accessories, such as clothing, luggage, watches and sunglasses.


Wendelin Wiedeking was executive chairman of Porsche SE until July 2009, and was widely credited with saving the company from collapse in the 1990s. A clause in his contract which entitled him to an annual bonus of 0.9% of the company's net profits made him Germany's highest paid executive in 2007 and 2008, earning as much as €100m a year. He was also the driving force behind the ambitious plan to acquire Volkswagen in 2008. When this failed, he stepped down in July 2009 with an additional €50m payoff. Deputy chairman & CFO Holger Haerter also resigned, and was subsequently charged with fraud for under-estimating Porsche's financial requirements to pull off the failed takeover. Following a three-year investigation, Wiedeking and Haerter were jointly charged at the end of 2012 by German prosecutors with unlawful manipulation of the financial markets. After a five-month trial they were finally acquitted in March 2016.

Michael Macht, previously head of production, was named as Wiedeking's effective successor, reporting to Volkswagen CEO Martin Winterkorn. Macht was subsequently promoted to the Volkswagen Group board in summer 2010 and Matthias Mueller was installed as the new executive chairman of Porsche. Following the sudden resignation of Volkswagen Group CEO Martin Winterkorn in Sept 2015, Mueller moved up once more in Sept 2015 to head the overall group. Production chief Oliver Blume was named as new CEO of Porsche Group.

Other executive committee members include Lutz Meschke (deputy chairman, finance & IT), Uwe-Karsten Staedter (procurement) and Detlev von Platen (sales & marketing). Kjell Gruner is VP, marketing. Robert Ader is marketing communications director.

The company's supervisory board is dominated by members of the Porsche and Piech families. Group chairman is Wolfgang Porsche, the youngest son of Ferry Porsche, architect of the group's growth after World War II. He is supported on the board by his brother Hans-Peter Porsche and nephew Ferdinand Oliver Porsche. Michel Piech and Ferdinand Piech are also directors; Michel Piech is also deputy chairman of the privately owned Porsche Holding of Austria. Although Porsche SE is publicly quoted, the Porsche and Piech families between them own all of its ordinary shares. They control 100% of Porsche Holding of Austria.


Ferdinand Porsche is one of the legendary names of the automobile industry. The Austrian-born designer first came to prominence in 1900 when an electric car he had designed was exhibited at the Paris Expo. He later joined the Austrian subsidiary of Daimler, and moved to Germany in 1923 to become overall technical director of Daimler, where he developed the legendary Mercedes SS and SSK sports cars. He left the company following its merger with Benz, and set up a business of his own in 1931, designing engines and turbines. In 1934, Porsche was commissioned by Germany's new national socialist government to design a mass-produced "people's car" or Volkswagen. His plans were approved, and the first prototype was built in 1936. Two years later, assembly lines were constructed for the new car, but war was declared before it could go into production, and the factory was turned over to the military instead.

Towards the end of the war, Ferdinand Porsche was arrested by the Allies and interned in France. His son Ferry and daughter Louise (now married to Viennese lawyer Anton Piech) re-established the design business in Austria, taking on a project to develop a Grand Prix racing car for the Italian tycoon Dusio. They used the funds to buy their father's release from internment, although he died a few years later in 1951. In the meantime, his designs for the Volkswagen had finally gone into production in 1946 under the management of the new West German state. Ferry Porsche was working on designs of his own. In 1948, he designed and constructed the first Porsche sports car, the 356 roadster. At the same time the family negotiated a significant deal with Volkswagen, under which they received a license fee for each Volkswagen model sold, and also acquired rights to import and distribute the cars in Austria and other markets. In return, Volkswagen agreed to distribute the new Porsche roadster through its own network. With this deal in place, Ferry Porsche moved back to Germany in 1950 to begin production of his cars, while Louise Piech took control of the import business in Austria.

The Porsche 356 model quickly earned a name for itself as a result of a series of racing wins, and Ferry Porsche introduced a new model, the 550 Spyder, in 1955. Sales grew steadily, and Ferry Porsche, together with his eldest son, Ferdinand Alexander Porsche, began work on another new model. This was to become the Porsche 911, introduced to considerable acclaim in 1964. Over the following years Porsche established itself as one of the world's most desirable sports cars, and the company floated part of its equity in 1972. Soon afterwards it introduced its 928 model, and Ferdinand Alexander Porsche also established the Porsche Design Studio to work on a wide range of other products. Ten years later the company introduced the Porsche 956 Grand Prix model, which was to become the most successful racing car of all time.

Meanwhile, the family-owned Volkswagen dealership in Austria had also grown substantially, and one of Louise Piech's sons, also named Ferdinand, had risen to prominence in his own right. Having begun his career at Porsche in the 1960s, Ferdinand Piech rose swiftly through the ranks but was prevented from taking a more senior job when the clan agreed amongst themselves not to allocate executive roles within Porsche to family members to avoid rivalry or charges of nepotism. Instead, Piech moved to Audi, and later Volkswagen itself, becoming group CEO in 1992.

Porsche, meanwhile, was badly damaged by the recession of the early 1990s, which eroded much of the huge gains the company had notched up during the 1980s. Wendelin Wiedeking, a production executive at the company, was appointed as its new CEO and he led a complete overhaul of the business, importing several business strategies from Japanese manufacturers to boost efficiency. Another significant success was the introduction of the entry-level Boxster model in 1995. Ferry Porsche died in 1998, and Ferdinand Alexander Porsche retired from active management of the group in 2005, leaving youngest son Wolfgang as the principal representative of the Porsche family within the company. Although Ferdinand Piech stepped down from the executive committee of Volkswagen in 2002, he remained chairman of its supervisory board, and consistently encouraged cooperation between the two companies. Volkswagen and Porsche first agreed to cooperate on the construction of the Cayenne SUV in 1998, and Piech was reported to be the architect of the recent plan for Porsche to acquire a controlling shareholding in the bigger company.

Last full revision 5th April 2016

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