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Porsche To Increase U.S. Advertising for Cayenne - Hello Porsche Here We Are!

LOS ANGELES January 6, 2003; Jeff Green writing for Bloomberg reports that Porsche AG will boost its U.S. advertising spending 50 percent this year as it rolls out commercials today for its new Cayenne sport-utility vehicle, which a company executive said will halt a slide in U.S. sales.

The Cayenne commercials will appear during National Football League playoff games and then return before the Cayenne goes on sale in March, Fred Schwab, chief executive officer of Porsche's North American unit, said in an interview from the Los Angeles auto show. He declined to discuss spending, other than to say it was "modest." U.S. sales should take half the 25,000 Cayennes built a year in Germany, he said.

The Cayenne is a key to the Stuttgart, Germany-based company's continued independence because the automaker needs to generate more money to pay for future research and development, Schwab said. The automaker almost went out of business in 1993 when worldwide sales fell to 11,000 and it can't afford another collapse, Schwab said.

"I'm still not sure why Porsche, a sports car company, has to do a sport-utility," said Gordon Wangers, president of Automotive Marketing Consultants Inc. in Vista, California. "I think it will sell well in the first year but I wonder if the sales will be so good in 24 months."

Porsche sales fell 7 percent to 22,511 in 2002 as deliveries of the Boxster sports car, introduced in 1997, dropped for the second straight year, the company said in a statement. The addition of the Cayenne will boost worldwide sales to about 75,000 next year, Schwab said.

340-Horsepower Engine

Chief Executive Wendelin Wiedeking said last month that earnings and sales in the year ending July 31 will top the previous fiscal year. Revenue in the four months ended Nov. 30 rose to 1.31 billion euros ($1.3 billion), while unit sales rose 0.1 percent to 14,717 cars.

The Cayenne, shown for the first time in the U.S. at the Los Angeles show, will come in an "S" version with a 4.5-liter, 340-horsepower engine and a turbo version with a 450-horsepower engine. It will also have a towing capacity of 7,700 pounds.

The sport-utility is aimed at Bayerische Motoren Werke AG's X5, DaimlerChrysler AG's Mercedes-Benz M-Class and Ford Motor Co.'s new Land Rover model sport utility vehicles.

Almost all of Porsche's 204 North American dealers have spent a total of $300 million to implement a new common dealership design theme required as part of the Cayenne introduction. Analysts have estimated that selling 25,000 Cayennes a year may mean $1.4 billion in increased revenue and $140 million in profit.