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How Porsche Does It

Why is Porsche doing so well? Probably because it is not trying to be all things to all people.
#Jaguar #Hyundai #Audi


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Consider Porsche.

In the recent J.D. Power 2014 U.S. Automotive Performance, Execution and Layout (APEAL) Study, which benchmarks new vehicles over 77 attributes, Porsche finished in the top position, with a score of 882 out of 1,000.

To put that into some context, know that second place was achieved by Jaguar, with 862 points.  That is a difference of 20.

So if we go down the list to see what is 20 below Jaguar, it is necessary to go through Audi (858), Land Rover (853), BMW (849), and Lexus (844) to arrive at Mercedes-Benz, at 842.

Which is to say that there are a whole lot of luxury makes that are all pretty close, but Porsche is in a category of its own.

Consider how well its vehicles did.  In the “Compact Premium Sporty Car” category, it was all Porsche Boxster and Cayman.  In “Midsize Premium Sporty Car” the 911 finished first, as did the Cayenne in “Midsize Premium SUV.”  That leaves the Panamera, which didn’t finish first in class in the “Large Premium Car” category, but did achieve a podium, coming in third.

About a month before J.D. Power reported out on the APEAL Study, it released its Initial Quality Study (IQS), a study that has plenty of people at OEMs sitting on the edges of their seats as it is, probably along with a good report in Consumer Reports, a key factor when it comes to purchase decisions among consumers.

Again, Porsche is at the top of the rankings.  In this case, a lower score is better than a higher one, as it is a measure of problems per 100 vehicles.

Porsche scored 74 in IQS.

And again, Jaguar was in second place, at 87, or a delta of 13.  In the case of the IQS things don’t work out quite as well as they do with APEAL in terms of using the 13.  But Lexus scored 92, Hyundai 94, and while there is no company that scores 100 (i.e., 87 + 13), Toyota is closest to that number at 105.

Panamera may have been third in class in APEAL, but it is first in class in IQS.  And in “Compact Premium Sporty Car” the top two, again, are Boxster and Cayman.  The 911 is best in class.  And the Cayenne finished second (to the Lincoln MKX) in its category.

All of which is to say the people at Porsche are doing a damn good job.

Of course, as is well known but not always achieved, the first rule in the auto industry is “Always make money.”

And looking at how Porsche did for the first six months of 2014, it is adhering to the rule.  Revenue was up 16%, to € 8.2-billion.  Operating profit was up 8%, to € 1.4-billion, or a return on sales of 17%.

It is worth noting that Porsche has made some significant investments during the first half in manufacturing and engineering.  In February it finished a > € 500-million plant in Leipzig, including a paint shop and assembly line, for the Macan.  In Weissach, it opened a new design studio, a wind tunnel, and an electronics integration center.  That represents an investment of some € 150-million.  And it is undergoing an expansion of its main plant, for which some € 700-million will be spent over the next several years.

Why is Porsche doing so well?  Probably because it is not trying to be all things to all people.  It is concentrating its efforts on what it does not simply well, but clearly best.  (One might make the argument that because it is part of Volkswagen Group, which does produce products, especially with its VW brand, for all people, it can afford to focus, but a counter argument would be that the reason that VW took over in 2012 was because Porsche was doing then what Porsche is doing now.)

Another thing to keep in mind is that Porsche is doing superbly well in all aspects of what it does, as the J.D. Power results indicate.  It has wonderful designs.  Clearly, its manufacturing capabilities are first-rate.  And everything from its seats to its user interfaces on its electronics seem to be well accepted by its customers, something (especially the last-named) that is an Achilles’ Heel for many of its competitors.

Focus and execution.

Those words seem to be synonymous with Porsche.

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