Porsche pushes for record on back of Cayenne sales in China

PORSCHE'S Cayenne is becoming the SUV for China's coal barons, setting up the Stuttgart carmaker to push for record sales this year.

110802 Porsche Cayenne

THE Porsche Cayenne - a car fast establishing itself as the SUV of choice for China's new coal barons - has propelled the German carmaker's strong sales growth in the world's biggest auto market and delivered a hefty rise in first-half profits.

The sales were also achieved with large operating margins of 20.5 per cent, a return that makes Porsche the world's most profitable leading carmaker. After the Cayenne, the second and third-most popular models were the Panamera and Boxster.

Demand for Porsche's cars is especially strong in China, where luxury cars are often bought with thick wads of cash and the latest models become units of rivalry as entrepreneurs compete with each other in a frenzy of ostentation.

In terms of market size for Porsche, however, China was behind the US, where sales were 25 per cent higher than the previous year.

Total global sales of the Cayenne more than doubled over the January-to-June period to hit 28,405 units and the main constituent was Porsche's 47 per cent sales increase in China.

The surge built on a relatively low base, but luxury carmakers attending the recent Shanghai Auto Show were unanimous in the view that the wealthy Chinese motorist - particularly women who had made their fortunes - would emerge as the customer they most wanted to chase.

In the first half of this year, China accounted for about a fifth of Porsche's global sales of 56,272 cars.

Based on that pace, the Stuttgart-based company said yesterday that it had set itself the goal of shifting 100,000 cars this year, a figure that would mark a sales record for Porsche.

It joins a clique of luxury carmakers whose recent results appear to have defied a sluggishness that has dragged on the general market in Europe and North America. Even in China, which last year overtook the US as the world's most valuable market, showrooms are resorting to ever more desperate measures to shift standard family saloons; they fear that, collectively, they may be left with four million unsold cars on their forecourts by the end of the year.

The looming Chinese backlog is expected to trigger a price war that could put thousands of dealerships out of business. In many parts of China, the first salvos of that price war have been launched. Some industry insiders report that "every brand is now on sale".

In 2009, China's car market grew by 50 per cent. Even in the slightly moderated liquidity boom of 2010, it rose by 30 per cent, prodding five million cars on to the choking streets of Beijing alone.

But auto sales registered anaemic growth of 3.25 per cent in this year's first half, on an annual comparison, as government stimulus measures were pulled off the table, Beijing introduced draconian limits on new car sales and inflation took hold.