SWITZERLAND: Porsche confirms 911 and Boxster production cuts - report
Porsche AG, the carmaker with the world's highest profit margins, has cut production of the 911 and Boxster models in response to falling sales of the sports cars as the economy stagnates and the US prepares to attack Iraq, Bloomberg News reported.
Porsche cut output by "several thousand" units of each model, chief executive Wendelin Wiedeking told Bloomberg News in an interview at the Geneva car show. Porsche expects sales of both models to fall in the current financial year.
According to the news agency, demand for Porsches has dropped as the main models have aged, jobs in the financial industry have been cut and customers hold back on purchases on concern that a war in Iraq might damage the economy. Securities companies in the US have slashed 75,400 jobs since a slump began and are expected to cut more this year.
"The 911 is the cash cow for Porsche," Knut Kuehnhausen, who helps manage 260 billion euros ($284 billion) at AXA Investment in Frankfurt and owns Porsche shares, told Bloomberg News. "The danger for Porsche is that their customers, despite being wealthy, are having second thoughts about spending with the generally bad economy and possible war in Iraq."
"We won't be able to reach last year's record sales for the 911," Wiedeking told Bloomberg News.
The news agency noted that in North America, Porsche's biggest market, sales of the 911 fell 39% in February, after declining the previous two months. Sales of the Boxster declined 35% last month. Last year, sales fell 19%.
According to Bloomberg News, the new Cayenne SUV should still increase Porsche sales and earnings. The news agency noted that Wiedeking has forecast the company will surpass last year's sales and earnings with the vehicle and that one of Porsche's goals with the car was to reduce the dependence of the company on its two main models.
Even if sales of the Boxster and 911 fall this year, Porsche should still increase sales and profit with the addition of the SUV, Bloomberg News said.
The news agency said the 340-horsepower Cayenne S is designed to lure buyers from BMW’s X5, which starts at about 41,600 euros, the Mercedes-Benz M-Class, with a base price of about 38,000 euros, and Ford's Range Rover.
According to Bloomberg News, Porsche has said it expects to sell 65,000 vehicles in fiscal 2003 compared with 54,234 last year while the company has said it already has orders for at least 25,000 Cayennes, or a year's worth of production.