Brandon B o atcallie, Austin Chase, Bobby Salehi, Ivo Skrisovsky, Alfredo Volio Texas A&M University I couldn't find the sports car of my dreams, so I built it world to not only the first hybrid (petrol/electric) vehi- myself. cle but an all-wheel-drive racecar as well. This splashl- introduction porsche's Frn-onraryo Ponscrr.e was merely the beginning of unprecedented success. 1 Introduction Ferdinand had what seemed to be the perfect ratio of brains to passion when it came to designing sports cars. After over 100 years as an independent and highly suc- The German citizen, born and educated in the Czech cessful car maker, in 2008, Porsche fell victim to the town of Liberec, not only engineered but aiso raced his financial crisis when it failed to secure the capital needed own models. In 1910, an Austro-Daimler sports car of to acquire a controlling stake in VW Auto Group (VW). his design won the prestigious Prince Henry Trials- During a reverse takeover in 2010, Porsche was forced with Ferdinand behind the wheel. to hand over its keys to VW. Subsequently, VW man- On April 25, 1931, Ferdinand porsche opened an agement, eager to use Porsche's expertise to assist other otfice for "engineering and consultation on engine and brands under the VW umbrella, began moving Porsche vehicle design" in Stuttgart, Germany. The compan1., executives into key roles with other automotive brands. Dr. Ing. h.c. F. Porsche KG, did not have to wait long for As part of the Porsche corporate restructuring ini- contracts to build vehicles for German manufacturers tiative, VW appointed former Audi executive Matthias such as Auto Union, Zindapp, NSU, and Wanderer. In Mueiler as Porsche's new CEO. Mueller had consider- perhaps a bit of irony, Ferdinand's company designed and able experience with Vw-the world's third largest sent into mass production the "Ur Beetle"-the first V\4. automobile manufacturer controliing the Audi, Bentley, "Bug" and the basis for a design that has not lost its appeal Bugatti, Lamborghini, Scania, Seat, Skoda, VW, and some 75 years later. Ferdinand clearly possessed the abilitr. now Porsche brands. Mueller's mission was straightfor- to anticipate and envision the future, maintain organiza ward: integrate Porsche into the VW family, extend the tional flexibility, and empower others to create one of the Porsche product line, and increase production. world's most valuable car brands. He was a racecar driver However, because of Porsche's successful track at heart, an engineer by trade, and employed his entrepre- record, there were many things to consider in the tran- neurial spirit on a daily basis in a growing company that sition of Porsche. Should Porsche diversif' and extend proudly carried his name. Ferdinand's son, known by all its product line while expanding production? How could as Ferry, began running the company tn 1946 and, upon Porsche effectively combat possible brand dilution? his father's death in 1951 and with his own son at his side. Should Porsche acknowledge the trade-offs and focus officially took the wheel. on its pure play products-sports cars? How would the Without question, Porsche was a powerhouse in rac- market react to multiple sports cars offerings from Audi, ing, collecting victories in virtually all major racing events Lamborghini, and Porsche? throughout the world including the Can-Am racing series, Paris-Dakar Rally, Pharaoh's Rally, Rally Monte Cario, History 24 Hours of Le Mans, and the World Championship of Makes. On the consumer side, in 1964, Porsche began Ferdinand Porsche, the engineering genius and founder producing what would become its most famous sports of Porsche, began carving his name in car history early car-the 911. Throughout the 70s and 80s, the 911 (and on. In 1900, at the age of 25, Ferdinand introduced the variations ot) kept Porsche in the black. 336 makers simplv absorbed the reiatir-elv minor fee' r) In i.ts efforts to provide variety in both design and car Boxster' The However, the 2009 legislation rmposes not only a sig- o :rice, in 1996, Porsche introduced the N nificantly higher mpg requiren-rent, but a significantly 9.0 3oxster was the first mid-engine production sports car ! as well: CAFE mandates that, by 2020, a ever manufactured and a big hit-selling as higher penalty ?orsche had t automobile manufacturers and importers must have an o r.rany in its first year as the entire 911 line-up combined' mpg rating of 39 for cars end -10 ior trucks or .r.2002, Porsche surprised many purists by presenting a average for each individual car in violation' Upon sports-utiiityvehicle-the Cayenne' Once again' Porsche's pay $35,700 pur.ng., Porsche commented that if the 2020 C'\FE poli- rewest offering outsoid al1 other models in its first two n.. enforced, it simply won't be able to sell cars in .,'ears. In 200S, the Cayman was launched as a hard-top ii., the US. ..'ersion of the successfui Boxster and Porsche once again On a more positive note, economic support tor .urprised the automotive world in 2010 by introducing Porsche is strong in its German homeland' Germanv is .he first four-door Porsche sedan ever-the Panamera' largest exporter in the world.T Union workers By 2011, the company produced five models with a the third are protected by strong labor laws and wide support' :ombined total of 40 different trim levels' This increased approximately 93 percent.cif the German workforce liversification brought higher shareholder returns-one and unionized.s Manufacturing employees constitute of Porsche's main objectives. is approximately 30 percent of the nation's workforce'e Economic and Political Challenges Though Germany has not been immune to the global recession, Porsche has continued to enjoy a supportive climate -\s it was for most automakers, the economic manufacturing infrastructure. beginning in 2007 was challenging for Porsche' Oil prices ,vele at record highs, topping $100 a barrel' For every I nd ten cents that gasoline prices rose, approximately 1'000 ustry Characteristics econ- trucking companies went bankrupt'2 The global The sports car industry faced its share of economic recession the omy strirggled to step out of the deepest woes throughout the latter half of the 20th century with US and Europe had experienced in decades' Consumers many sports car makers experiencing fatal cash flows' in the rr.ere extremely price sensitive and unemployment Lamborghini declared bankruptcy in 1978' It was later concern US hovered around 10 percent' Of particular revived and sold to Chrysler only to then be sold to the car manu- to Porsche were gasoline prices: as a sports Suharto family in 1994 and sold again to Audi in 1998'10 of a gas-guzzling t-acturer, it was fighting the stereotype In that same year Bentley, Bugatti, and Audi (and thus automobile segment. Lamborghini) were acquired by VW. Aston Martin' many of its Consequently, Porsche re-engineered which had sold a controlling share to Ford in 1987, was gasoline effi- offerings to provide (relatively) higher bought outright by Ford in 1994 and then sold again in 911 Turbo had an EPA estimate 1990 ciency.lor example, the 200i." Jaguar was also bought and sold by Ford in of the 90s; of 18 miles per gallon (mpg) throughout most and 2007, respectively. Getting out ofthe gate even ear- (depend- however, the 2010 estimate was 24 to 25 mpg lier, Fiat acquired Ferrari in 1969, Alfa Romeo in 1986' as a bonus' came ing on cylinders and auto/manual) and, and Maserati in 1993.1'] Even so, through it all, Porsche addition' u,iih roughly 75 percent more horsepower' In managed to not only stay independent but, more impor- offered the hight soughi after Carrera (a 911 variation) tantly, financially buoYant. '-pg, even the 2+ toiZ tn. Boxster 26 to 29 mpg' and Porsche competes in a market segment where rel- SUV Cayenne boasted 22 to 23 mpg'3 a car of any l=, four-wheel diive atively few can iompete. Manufacturing ]F rekindled Unaccustomed to traiiing the pack, Porsche caliber-no less the caliber of Porsche-requires size- E Ca1'enne and its hybrid roots by engineering a hybrid able capital investments. Additionally, the engineering respectively'a Panamera S with mpg ratings of 25 and 35' expertise required to design a car capable ofcompeting F fuel And yet, even with Porsche's efforts toward wiih famboighini, Ferrari, Aston Martin, Porsche' and even more efficiency, US government actions have put others keeps utt Uot the truly intent from entering the the direc- pressurs on the Bavarian carmaker' Under field. Traffic iio,-, of President Obama, the National Highway Though there seem to be several supercarloptions the mpg Safety Administration and the EPA increased like the Mclaren MP4' Ferrari FXX, and Ferrari Enzo requirements for ali cars in the US through an old emis- that cost more than $500,000, consumers have few sions policy known as Corporate Average Fuel Economy levied small fines on is hiqhly (CAF-E). In the past, CAFE had A supercar is typically an exotic or rare sPorts care whose perfomance Cars TopSpeed com carmakers with mpg ratings that didn't meet specified super ative to contemPorary spotls cars (Supercars/Exotic rslsu percars-exotic cars/ke 1 77 htm l)' regulations and Porsche and other high-performance http:,/,/www.topspeed.com/ca G obe: @ Jan Rysavy/iStockphoto com alternatives-if any-for g100,000 a mid to low car believes China like will be the largest consumer segment the Porsche 911 Turbo_particularly one that for Porsche within two or thre-e r1.- supercar pe.formar.ce.