The CEO of Porsche says made in Germany worth more than local cost savings
China now one of brand’s largest volume markets
A growing number of automakers are building factories in China, largely considered a necessity there because of import costs and duties. Porsche, though, isn’t on that list. And the company’s CEO says it doesn’t expect to be soon, as being made in Germany is part of what makes the company a premium product.
“It is a quality and a premium argument still to produce from Europe for China,” chief executive Oliver Blume told the Financial Times. “Today it doesn’t make any sense [to move production].”
While Mercedes, Audi, and BMW all build an increasing portion of their vehicles in what is now the largest auto market in the world, Blume, who is also on the board of Porsche parent Volkswagen, said that its buyers feel the cachet is worth the extra cost and so it’s worth the automaker dealing with those costs rather than switch to local lower-cost production in China.
“That’s also the feedback we got from our dealerships and from our customers,” he said.
Porsche did fall behind its competitors in growth in that market last year, FT reported, but Blume explained that “the premium market was developing much quicker [than expected in China] and we weren’t able to follow because 100 per cent of our production comes from Europe.” However, that allowed Porsche to hold prices steady instead of offering large discounts to drive sales like its competitors did over the same time frame.
It also helps that Porsche builds less than 300,000 vehicles annually, a tough volume to split up for production on multiple continents without losing advantages of scale. Is the decision permanent? “In 10 years, I don’t know,” Blume said. “It depends a lot on how volume develops and also the regulations in each country.”
Of course not all of Porsche’s models are built in Germany, the Cayenne is sourced from Slovakia and previous versions of the Cayman and Boxster were built in Finland.