As Porsche Revs Up Boxster, Profits Are Soaring

It makes some of the quickest cars on the road. But when Porsche AG develops new autos, it moves like a Model T. Its flagship, the legendary 911, has been around in some form for 33 years. And it hasn't introduced a completely new car since 1978.

Until now. Finally, the German automaker has pulled the wraps off its eagerly-awaited Boxster, a slick, two-seat roadster that may help Porsche regain some of the sales it lost during a drastic slump in the late 1980s and early 1990s.

Ironically, the Boxster and two other new German roadsters arrive just as the Japanese are retreating from the American sports car market.

"The Boxster is a very important step for our company," Porsche chairman Wendelin Wiedeking said at a press preview in Paris. "A company can't survive just by cost-savings projects. You also need good products."

Porsche clearly had to pull in its belt in recent years. Worldwide sales peaked at nearly 50,000 in 1986. By the time things stabilized, sales in Porsche's biggest market, America, plunged almost 80 percent. Sales in fiscal 1996 were just 19,219.

Even so, there are already signs of revival. This week, Porsche reported a huge rise in 1996 earnings to $32 million after slashing its work force and boosting productivity.

To survive, the company was forced to abandon practices that enshrined inefficiency. At its Stuttgart plant in southern Germany, for example, cars had been pushed by hand along a rickety conveyor belt.

When Dr. Wiedeking arrived at the company, he called in a cadre of Japanese consultants, including former executives of Toyota, the world's most efficient automaker. By the time the dust settled, Porsche cut the time it takes to build a 911 nearly in half - to an average 76 hours in 1995 compared with 120 hours in 1991. By 1997, that is expected to be down to only 45 hours.

Meanwhile, the company also reduced its product line, abandoning the slow-selling 928 and the criticized 968.

Even these steps and transforming the 911 weren't enough to regain all the lost ground, however. The simple fact was, the 911, the only car left in the line-up, had been priced out of the market for most potential customers. Today it costs $63,000.

That's where the Boxster comes in. At around $40,000 out the dealer's door, the new roadster is more affordable - at least by Porsche standards. Yet it lives up to the company's high-performance image. Completely new, the Boxster is powered by an aluminum, 24-valve 2.5 liter flat-six engine (the design is the source of the car's odd name) that generates 201 horsepower. Stomp on the gas and the roadster will race from 0 to 60 miles per hour in a neck-snapping 6.7 seconds. Top speed is 149 m.p.h.

Initial reviews are extremely positive. And the Boxster's first year of production is already sold out, Wiedeking says. He insists volume can easily reach 15,000 units a year, with two-thirds of that split between the US and Germany.

While some skeptics worry the new car might cannibalize sales of the more expensive 911, Wiedeking ebulliently sees the Boxster drawing in 80 to 90 percent new customers.

The 911 is typically used as a weekend plaything by its affluent owners. The Boxster, by contrast, is expected to serve as the only car for many owners and draw far more women buyers.

Porsche's forecast seems optimistic. Demand for sports cars, particularly in the vital US market, has all but dried up. Gone are Japanese nameplates like the Nissan 300ZX.

Yet the Germans have reentered the market with a vengeance. Earlier, BMW introduced the Z3 roadster. Then Mercedes pulled the wraps off its $40,000 SLK roadster.

Auto analyst Joe Phillippi of Lehman Brothers says the Germans could succeed:

"There's heritage to companies like BMW, Mercedes-Benz, and Porsche," he says. "You don't get that from Nissan, Toyota, or Honda."

You've read  of  free articles. Subscribe to continue.
QR Code to As Porsche Revs Up Boxster, Profits Are Soaring
Read this article in
https://www.csmonitor.com/1996/1205/120596.econ.econ.2.html
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe