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Coronavirus: Porsche idles German plants as China dealerships reopen

Jill Petzinger
Jill Petzinger, Germany Correspondent, Yahoo Finance UK
Oliver Blume (L), CEO of Porsche and Lutz Meschke, CFO of Porsche pictured at the company's annual press conference on March 15, 2019 in Stuttgart, Germany. Photo: Thomas Niedermueller/Getty Images

German sports-car maker Porsche (PAH3.DE) says that 2019 was “the most successful year in the company’s history” as it “defied industry trends” to increase deliveries, sales revenue, and operating results.

However, Porsche, like all other global carmakers, is now facing massive uncertainty as the rapid spread of the coronavirus pandemic stalls production and hampers demand in Europe.

Chief executive Oliver Blume said ahead of the company’s live-streamed annual press conference on Friday (20 March) that the full negative impact of the pandemic is still unforeseeable.

“The international automotive industry has been hit by the crisis during an extremely challenging period of transition,” Blume said.

READ MORE: Coronavirus: BMW braces for month-long production stop and 'significant' sales drop

Porsche is suspending production at its Zuffenhausen and Leipzig plants from Monday, initially for two weeks.

“The more consistently we act now, the faster we will overcome the crisis,” Blume said. He said that a two-week halt would not have much of an impact on production, but right now it is too early to say what will happen.

Lutz Meschke, executive board member for finance and IT, added that the coronavirus crisis is very different to the financial crisis of 2008 and 2009, because there is enough liquidity in the markets right now, so there is scope for loans and subsidies.

China recovery

Porsche suffered a 75% plunge in sales in China, its largest market, in February this year, as the coronavirus peaked, dealerships closed, and daily life came to a complete standstill.

However, with the worst of the epidemic seemingly over in China, Blume said that their Porsche colleagues there are resuming normal daily lives again.

“The Chinese market is rising much quicker than we thought,” said Blume. “Round about sixty to seventy percent of our dealerships are open once again.” He said that it is impossible to predict right now whether Porsche sales will rebound back to their 2019 levels in China.  

Year of the Taycan

04 March 2020, Baden-Wuerttemberg, Stuttgart: Porsche employees assemble a Porsche Taycan in production. Photo: Marijan Murat/picture alliance via Getty Images

Porsche delivered a record 280,000 vehicles last year, a 10% increase on 2018, with over 61,000 of those in the US. Sales revenue rose 11% to €28.5bn (£26.1bn, $30.6bn), operating result before special items increased by 3% year-on-year to €4.4bn, and the return on sales before special items was 15.4%. The workforce grew by 10% to 35,429 employees.

“In 2019 we achieved new record values in terms of sales revenue and profits before special items, the increase in profits is due particularly to the strong increase in volumes as well as the positive development of our other business fields and divisions,” Meschke said.

The 2019 launch of the Taycan, Porsche’s fully electric sports sedan, was a huge step for the company that created the iconic 911. Blume said that to date some 15,000 customers have now signed purchase contracts for the Taycan, which started deliveries in the US at the end of last year.

Porsche’s two wildly popular sports utility vehicles powered sales in 2019: it delivered over 92,000 Cayennes, an almost-30% increase from the year before, and nearly 100,000 of the smaller Macan SUVs last year. A fully electric Macan is expected in 2022.

READ MORE: Volkswagen reports 'very successful year' as coronavirus clouds 2020 outlook

Meschke said that higher fixed costs due to growth, big investments in electrification, and currency effects had impacted on results, though the company nevertheless again exceeded its targets. “We are still one of the most profitable car manufacturers in the world,” said Meschke.