Not So Fast, Porsche

Most auto maker executives today are walking around like shell-shocked Taliban, wondering how they are going to survive the coming year. But the top brass at Porsche AG are supremely confident that “the most profitable automaker in the world” will remain so in 2002, and that its stock will continue to leave even prosperous BMW AG in the dust.

The German automaker indeed has had a wonderful run the past few years, and its huge profit margins have enabled its stock to transcend the automotive market and be valued in some circles like a luxury goods producer such as Tiffany and Co.

Despite growing weakness in the U.S. and Europe — its two primary markets — Porsche bases much of its optimism on the upcoming introduction of its Cayenne luxury SUV, which it expects to be a runaway success.

However, Germany's influential Commerzbank now is throwing some cold water on Porsche's overheated expectations.

In a detailed analysis titled “Hot Cars, Heated Valuation,” Commerzbank warns that Porsche stock already is valued like the Cayenne is flying out of dealerships. In fact, the first customers won't be taking delivery until August, and the new vehicle won't have any impact on Porsche's bottom line until the 2002/2003 financial year.

Furthermore, Commerzbank analysts warn that Cayenne's success is far from guaranteed and could actually dilute the hallowed brand — something Porsche aficionados have been grousing about ever since plans for the SUV were announced.

“We believe it is difficult to see any near-term upside. We do not expect to see much in the way of positive news until at least the end of next year, when customer response to the new Cayenne is clearer,” the report concludes.