Porsche may build cars in China

In an interesting recent interview with Germany’s Westfalen-Blatt newpaper, Porsche CEO Matthias Müller was asked about the company’s plans to manufacture overseas, given the pressures which accompany exponential production driven by unprecedented demand.

“If the necessity does in fact arise, we will have to react. If an important market has obstacles such as taxes or customs regulations, you’ll eventually start building cars there rather than simply giving up that market. Up until now, however, we’ve seen no indications that we’ll have to do anything like that.

“Financially speaking, a new factory doesn’t become profitable until it produces 100,000 units. We don’t have any models that we sell on such a scale in China, for example. So, the whole idea doesn’t make any sense from a financial point of view. Nevertheless, we’re monitoring developments in various markets very closely in order to determine whether we might have to address this issue at a later point in time. If it comes to that, we’ll deal with it and come up with a solution.”

Porsche Matthias Muller

The Commander-in-Chief (above) was not pressed on the point by the bourgeois conservative newspaper (from Wikipedia – love it) and, while the transcript rings true with Müller’s straight-talking style, you sense a PR cloak on part of the picture. I don’t doubt that the boss is happy with things as they are, but generating 100,000 units could be possible if it was not purely a Porsche factory.

Porsche may build cars in China

Volkswagen sells well over 2.5 million cars in China. A VW manufacturing unit could build a Chinese Macan for that side of the globe, as part of a bigger production portfolio.  With Porsche Macan using Golf GTi engines and who knows how many other Volkswagen parts, Macan will one day be Porsche’s biggest seller. Why would Stuttgart incur the risk and expense of shipping tens of thousands of cars from Germany every year, when a factory inside the Peoples’ Republic could just bolt them together and ship straight to dealers?

“We built nearly 190,000 vehicles last year,” says Matthias Müller, “which means we’re still not completely exploiting our total capacity [in Germany]. For the moment, there’s no need to expand our manufacturing facilities again.”

Porsche’s plants are recruiting and adding to production capacity. Porsche expects to add 3,000 new people in 2015, taking the total employed to 25,000. Consider the cost of supporting that workforce under EU legislation, add all the other costs involved in European production and how long can Stuttgart hold out against the economics of an overseas plant serving Eastern demand? It’s an interesting chess game of brand image versus bottom line.

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