Porsche's luxury image is looking threadbare

The German sports carmaker's market value has declined by more than $106 billion since its 2023 peak

- Chris Bryant

Is Porsche still a luxury brand? The question might seem ridiculous or even impertinent to someone yearning for one of its 911 sports cars that cost a minimum of US$130,000 (S$168,000), or more than $710,000 in Singapore, and considerably more for the most thrilling and customised derivatives.

But after warning on Sept 19 that it will barely scrape a profit in 2025 and announcing a big cut to its medium-term earnings ambitions, Porsche's cachet - at least in the eyes of investors - is now very much up for debate.

The latest profit downgrade - the fourth in quick succession - undermines the German carmaker's claim to have a luxury business model, with negative implications for the way the stock is valued.

To recap, when Porsche first sold shares in 2022, it emphasised the uniqueness of its "luxury with scale" approach, combining the superior pricing power of high-end carmakers like Ferrari with the greater sales volumes of merely "premium" manufacturers such as BMW and Mercedes-Benz.

The word "luxury" appears about 300 times in Porsche's initial public offering prospectus, leaving investors in little doubt about where Porsche's management viewed its positioning on this exclusivity spectrum.

For a while, its strategy appeared to gain traction: The following year, it raised its long-term profit ambition to a 20 per cent operating return on sales.