Porsche Spent Years Chasing Volume. Its New CEO Is Undoing That.

Recently I published a memo asking whether Porsche is running the playbook Rolex ran through the quartz crisis. Hold the mechanical watch line, lean into premium, and let the cheaper technology win the volume argument somewhere else.

Then Porsche revealed the Mission S concept car in New York recently, and their strategy became very clear to me.

The car has no central touchscreen. It has a physical key slot and an analog tachometer. It's mid-engine. And it will not be offered as a battery electric vehicle. Porsche calls it a tribute to Ferry Porsche’s vision, describing the approach as timeless, minimalist and focused.

This is Porsche attacking premium in a way few other automakers can.

Further than I thought the company would go. The Mission S sits above the 911. Porsche has built above the 911 before. But those were limited runs that came and went. This one is meant to stay.

Porsche has not put a price on it. The segment it enters answers the question anyway. This mid-engine car will compete where Ferrari lives. Ferrari cars start in the mid six figures and climb from there.

Look at who is running Porsche now as well. Michael Leiters became CEO in January after more than a decade at McLaren and Ferrari, as reported by Stephen Wilmot in The Wall Street Journal recently. His new chief designer, Tobias Sühlmann, came from McLaren.

Leiters seems to be attacking both Porsche’s products as well as its culture. He described how he is trying to build an entrepreneurial mindset and drive a willingness to put in hard work at the company.

Work-from-home days have been decreased. Bonuses are now tied more closely to financial performance. Part of future bonuses will be paid in stock. And German staff received no annual bonus this year.

A company does not rewrite how it pays people unless it has concluded the problem is bigger than the product line.

In hindsight I think it was, and not for any reason having to do with the car. The Macan drives like a Porsche and it sold extremely well.

My problem today with it is directional. The Macan opened a lane that carried Porsche down-market toward a volume contest with BMW and Mercedes. Those brands are luxury and they’re German. But they are not Porsche.

Porsche chased scale then. Scale doesn’t seem to be as important to Leiters as it’s been in the past for previous CEOs.

Leiters is developing a plan the market can measure. A car above the 911, higher average transaction prices, a leaner cost base, and a culture built to hold all three together.

The thing that will tell us whether it works is the same thing I pointed to in another recent Porsche memo. It’s about Porsche's Margin! Can Porsche actually elevate it's operating margin with Lei

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