John H. in DC Area

USA TODAY
12/12/02
By David Kiley

Porsche says Cayennes sold out but individual buyers haven't paid for SUVs

DETROIT -- Porsche's CEO says all 25,000 of the 2003 Cayenne sport-utility vehicles are sold. But they aren't, at least not to individual buyers.

North American dealers, who will get about 18,000 of the total, say they aren't sold out. They can't even legally accept deposits in some places from eager buyers certain they want the $56,000-$89,000 high-performance SUV when it goes on sale in March.

The distributor, Porsche Cars North America (PCNA), can't confirm that the U.S. allotment is gone before it arrives, although pre-sale interest seems high, and dealers have spoken for all the Cayennes. ''We have identified 20,000 hot prospects here in North America, and we believe enthusiastic buyers are lining up for the Cayenne,'' says PCNA spokesman Martin Peters.

Cayenne is Porsche's first SUV. Purists say it's heresy for the sports car company to field an SUV. But dealers say they need it to lure new customers to showrooms and bring former Porsche buyers back at a time of sinking U.S. sales.

Porsche has paid for Cayenne's development out of operating cash, so will earn a big profit on the first Cayenne sold. But if Cayenne sales aren't hot, Porsche's halo will be tarnished and financial analysts could begin to doubt the company's judgment.

Porsche CEO Wendelin Wiedeking said at an earnings conference in Germany last week that the company earned a record $828 million in the fiscal year ended July 31, up 40% vs. a year earlier. He said Cayenne is sold out and that should make this year even better.

Porsche's stock price rose 0.7% on the German exchange the day of Wiedeking's comments. An index tracking European auto stocks was down 0.2%.

Wiedeking wasn't available, but a Porsche spokesman in Germany said the sold-out assertion is based on orders and verbal reports from dealers, not on pre-sold consumer orders.

Sacramento Porsche dealer Jonathan Beitz says he has a list of 120 interested buyers, but has no deposits, hasn't been told what his allotment will be and doesn't consider any of them sold. ''We just don't know how many of these will turn into actual sales or how long someone will have to wait until we actually start selling them,'' Beitz says.

He expects Cayenne to sell easily, but says it's premature and speculative to say that they already are spoken for.

Vivian Reeves, a Tampa dealer, has 55 customers who want test drives, but -- like Beitz -- she has no deposits, doesn't know how many Cayennes she'll get and can't consider any of them sold.

North American sales are 43% of Porsche's worldwide total, and sales in North America are down about 7% this year vs. last year.

Cayenne has been controversial since June 1998, when Porsche announced it was taking the unusual step of co-developing the vehicle with Volkswagen. The Cayenne and the Volkswagen Touareg SUVs not only were developed together, but also are manufactured together at the same factory.

''When I first heard about it, I said, 'You can't do this,' '' Reeves says, ''but I think they did a beautiful job.''

Not all agree. When pictures of the SUV were published last March, German auto industry analysts were so negative on the styling that Porsche shares fell 5% the next day.

Skeptics wonder if buyers simply will choose the VW, satisfied that it is a premium brand and that the affiliation with Porsche provides sufficient engineering rub-off on a vehicle as much as $40,000 less expensive than Cayenne.

Porsche's name will overcome that, predicts Jim Hall of consulting firm AutoPacific. He forecasts that Porsche won't have to seriously market Cayenne until the third year. ''There are that many people who want anything new with a Porsche badge on it,'' he says.

He might be right.

''A Porsche SUV? My initial reaction was disgust,'' says management consultant Sat Lally, a three-Porsche owner in Vancouver, British Columbia. His disgust didn't prevent him from putting down a $1,000 deposit for a Cayenne in 2000, two years before he knew what it looked like.

Despite that optimism and the sold-out pronouncement, Porsche itself seems a little anxious. At the earnings conference last week, Wiedeking acknowledged, ''The Cayenne is the biggest challenge the company has ever faced throughout its entire history.''

993RS

Despite that optimism and the sold-out pronouncement, Porsche itself seems a little anxious. At the earnings conference last week, Wiedeking acknowledged, ''The Cayenne is the biggest challenge the company has ever faced throughout its entire history.''

So why did Wiedeking put Porsche in such a position in the first place? Why a SUV of all things, and not a 928 successor?

John H. in DC Area

[quote]Originally posted by 993RS:
So why did Wiedeking put Porsche in such a position in the first place? Why a SUV of all things, and not a 928 successor?<hr></blockquote>

Two words: easy money.

John H. in DC Area

Of course, we all might have different definitions of "easy."