Porsche is about to launch a brand new model in a brand new segment (for Porsche, that is) and it couldn't be happening at a worse time.
Sure, the global recession is hurting sales at Porsche, as at every other luxury car maker. But that's not the really big problem. No, the even bigger mess is a staggering debt load, a failed (though bold) attempt to buy Volkswagen Group, and a family feud.
The Panamera is the new car, of course. Porsche calls it a "four-door Gran Turismo," though critics - and there are many, some of whom have written me here at Globe Auto - have not been quite so kind. The design of this four-door car with a hatchback at the rear has stirred plenty of controversy.
One of the many critics says the Panamera is as "far removed from its founder's philosophy as you can possibly get - at least without being a truck."
To which Porsche board member Klaus Berning replies, "We know that on many occasions, he [company founder Ferry Porsche] toyed with the idea of building a sporting four-seater. In fact, you are able to see one or two of these prototypes in our new museum. But back then, time was not yet ripe for such a car."
Porsche thinks the time is ripe right now. Well, when planning began back in 2005, this year probably looked dandy to introduce a fourth model range for Porsche, this one a four-door car to compete against the likes of the Mercedes-Benz AMG S-Class and CLS, the Maserati Quattroporte and the upcoming Aston Martin Rapide.
Perhaps not so much now. As Berning points out, the market segments in which Porsche competes "show an average decline in sales of up to 40 per cent." Porsche sales are down about 15 per cent worldwide, he says, though on an operating basis, Porsche remains "one of just a few car makers the world over still writing black figures today."
The Panamera, when it rolls into Canadian showrooms this October, will start at $115,100 for the base S version. The four-wheel-drive 4S will list for $120,300 and the monster Panamera Turbo tops out the range, sans options and extras, at $155,000.
Porsche, says Berning, plans to sell 20,000 Panameras a year worldwide, while in Canada a couple of hundred a year seems likely. No one can be truly sure about sales numbers, though; those big macroeconomic issues loom large.
Dynamically, the car is just about everything you'd want in a four-door Porsche. Of course, the critics out there are carping about the Panamera being a repudiation of the "singular vision and philosophy" of company founder Ferdinand Porsche, who 61 years ago put his engineering genius to work on light and agile sports cars built unlike any other.
Then there is the racing heritage angle. At one time, Porsche's racing success was envied by most other car manufacturers save Ferrari. The Panamera, the story goes, takes Porsche down the road pioneered by the Cayenne SUV, and we all know how much traditionalists hate that vehicle. They call it a "bloated blunderbuss of an SUV." Nonetheless, the Cayenne until recently was a profit-spinning wonder for Porsche and I've never met an owner not in love with the Cayenne.
Nonetheless, neither the Cayenne nor the Panamera is what any sensible person would call a light and agile sports car, and Porsche has no plans to take the Panamera racing.
That said, I'm told race car driver Walter Rohl did just set a record lapping the famed Nurburgring track in a Panamera, and the details are to be announced at any moment.
The critics have their points and they'll keep making them. Many also say the Panamera is Porsche's latest, heartless, mercenary attempt to crack the Chinese luxury-car market. Porsche did stage the global debut of the Panamera earlier this year at the Shanghai motor show, but let's get real here: Porsche sells cars all over the planet and, with only four model ranges, would be crazy to create one of them solely or even primarily to grab wealthy Chinese buyers and government officials.
The debate swirling out there is interesting, however. And it certainly has riveted the designer-suited leadership at the very top of the company. That, and the planned takeover of Volkswagen, which has saddled Porsche with a crippling debt load, not to mention the sort of red-faced embarrassment no Porsche executive or owner happily endures.
Berning, at the press drive of the car, said he would not comment on this matter and "the rumours that Porsche will have to be completely restructured," calling all of it "utter nonsense." Then he proceeded to comment.
Porsche's operating profit remains in the double digits, he said, adding the Porsche image is strong, its quality right at the top of global rankings, and the Porsche brand "a priceless jewel. Our brand value of $17.5-billion (U.S.) makes us No. 35 in the ranking of the world's 100 most valuable brands." Better than Mercedes-Benz, but behind BMW.
As Porsche sets out to spin interest and pull in deposits for the Panamera, though, the most senior management is right now figuring out how to retain its independence while coping with the staggering €9-billion ($14.5-billion) debt load Porsche amassed building up a 51-per-cent stake in Volkswagen.
Porsche needs to reduce that burden. The options include a possible merger with VW, in which case Porsche would become another brand in the VW empire. Or the Gulf emirate of Qatar might buy a 25-per-cent stake in Porsche at any moment. Reports in Europe say a majority of members in the Porsche and Piech families, which control Porsche, are said to back a deal for Qatar to acquire a stake. This would mean they would give up control of the family business.
To tide Porsche over until a resolution comes, Porsche has applied for a loan of €1.75-billion from a fund the German government set up in March to help companies staggered by the financial crisis. Porsche, though, has been less hurt by the recession than by its borrowing billions in a now-failed bid to take over VW.
Late last year, Porsche, in fact, announced that it had shares and options equal to nearly 75 per cent of VW's stock. Various reports now say Porsche's outsized debt load, built up buying the stock and options, became an albatross when lending around the world dried up late last year. Der Spiegel, the German magazine, reported earlier this year that Porsche came close to insolvency during a three-day period from March 22 to 24.
How all this ends will be spectacular entertainment for business types and gossipmongers alike. The Porsche saga is not just a story about finance, but one of Dynasty-like family feuds. It's juicy stuff.
Porsche, remember, was founded after the Second World War by VW Beetle creator Ferdinand Porsche's son, Ferry. Porsche's daughter, Louise, married Anton Piech, a Viennese lawyer. Their son, Ferdinand, is now chairman of Volkswagen and sits on Porsche's board. Wolfgang Porsche, another family scion, is chairman of Porsche and sits on VW's board.
Together, the Porsche and Piech families have maintained control of Porsche by holding all the company's common shares themselves, letting outsiders acquire only preferred shares without voting rights. But if Qatar gets several billion in ordinary shares up to a 25-per-cent stake, then the Porsches and Piechs stand to lose control.
This is shocking. For decades, the families - which are known not to get along - have managed to defend their rights through all previous crises the sports car maker has experienced. There have been many, including a brush with near-bankruptcy in 1992.
So it's an interesting time at Porsche. New model, new model range, the limping global economy, the debt load, a possible changing of ownership's control and critics coming out of the woodwork to throw darts at Porsche's product plans.
All this while the company continues to churn out operating profit, shine in quality studies, command enviable resale values for its products and enjoy a loyal ownership following.
As one Porsche insider said at the launch, "It will be nice when all we have to talk about is launching the cars."
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