Porsche Chairman Says New Cayenne SUV Will Boost Sales, Profit

Wednesday , 4:58 pm ET

PARIS September 25 German luxury sports car maker Porsche AG Wednesday said the addition of a third model to its lineup should lift unit sales by around 50% in the coming years and boost profit as soon as fiscal year 2003.

Porsche Chairman and Chief Executive Wendelin Wiedeking said the company made its largest one-off investment ever, plowing more than EUR500 million into developing the Cayenne, a sport utility vehicle that will hit German showrooms in early December.

However, the company will make a profit on the very first car since it wrote off all development costs in previous years' accounts, Wiedeking said at a press conference ahead of the Paris Motor Show, scheduled to start Thursday.

He said Porsche will ramp up production progressively in 2003 with the aim to crank out an annual average of 25,000 Cayennes in the coming years from a new facility in Leipzig.

The company made 55,050 sports cars in fiscal year 2002.

Wiedeking reiterated that strong sales of top-end models coupled with a shrewd hedging policy will allow Porsche to post a double-digit increase in pretax profit for the full year ended July 31 when it releases earnings in October.

Wiedeking said there is no plan to fit the Cayenne with a Diesel engine because it would not be suitable for its most important market - the U.S. "Apart from costing us money, it wouldn't give us anything," he said.

The first attempt in years by Porsche to make a car in which the rear seats can be used for more than storing an umbrella and an attache case has been met with skepticism by Porsche fans, who have complained about the Cayenne's looks.

Wiedeking, however, said the German car maker was used to being blamed of being "heretical" each time it introduced a new model. The company is confident the Cayenne will be a commercial success, he said, for orders received already exceed production capacity.

The Porsche chairman said there are no immediate plans to enter a Cayenne in the Paris Dakar rally for the company is focussing on a project to re-enter motor racing "on a race track with slick tires."

Porsche won the Paris Dakar twice in 1984 and 1986 with modified version of its 911 sports car.

Wiedeking stopped short of providing further details on Porsche's plan to add a fourth model to its lineup, only saying "there are big thing are in our pipeline."

The Cayenne will be available with atmospheric and turbo engines with price tags ranging from EUR51,900 to EUR86,900.