Porsche Wanders from Home: Takes First Step to Building Outside of Germany
Catering to a global market
The modern automobile landscape has far evolved from the days where you could confidently state a car’s country of origin. Companies looking to cater to global markets have strategically situated factories in the countries they serve most; with the likes of Toyota assembling Camrys in Kentucky and Siennas in Indiana.
Not much offense is taken when everyday cars employ this method of manufacturing logistics; that is, until you move up in the market to marques with pedigree. In Toyota’s case, they received major backlash for building the new Supra in Austria in collaboration with BMW. Why? Fanboy arguments aside, the Supra name carries weight for enthusiasts, and some are livid at the thought of a Japanese icon getting the European treatment.
With this in mind, Porsche has been treading carefully on its moves forward as the brand becomes more globally accessible. The internet era may have made the world a much smaller place virtually, but vast lands and seas still separate us in the real world – creating their fair share of logistics hurdles and costs.
The pinnacle of German engineering
Porsche is a proud company, and rightfully so. The Stuttgart-bred legend has carried its cars to countless podium finishes and celebrates decades of timeless design and motorsport-driven engineering. Their cars are often set as class-leading benchmarks for other manufacturers to stack up against (Toyota even reportedly bought and tested multiple 718 Caymans when developing the new Supra) and they’re arguably the pinnacle of German road cars today. So why does a company who’s marketing slogans contain the likes of “Made in Germany” consider opening a factory in Malaysia? Well, the answer lies in simple economics.
Malaysia has an interesting approach to cars, primarily when it comes to importing them. It’s one of the few countries slated to transition to a “high-income economy” between 2024 and 2028, as predicted by The World Bank Group. Their ridiculously high import duties and taxes make it offensively expensive to bring cars into the country. Interestingly, the duties and taxes vary depending on the engine capacity of the car being imported (sounds like an arbitrary metric to measure against, if we’re being honest). Porsche is looking to capitalize on this economic growth (and mitigate said import fees) by building an assembly line, the first outside of Europe, to cater to the growing Malaysian market.
Quality and prestige
Before “Made in Germany” purists cause an uproar, the cars produced in the Malaysian factory will only serve the Malaysian market. Albrecht Reimold, Member of the Executive Board for Production and Logistics at Porsche, assured that existing Porsche factories in Germany are “more than up to the task of meeting current and future global demand.” He went on to state that this new Malaysia factory showed Porsche’s “willingness to learn and adapt to specific local market conditions.”
Although this may lead one to believe that factories outside of Germany will become a norm in the future, Porsche CEO Oliver Blume told Financial Times that they didn’t want to reduce the brand’s premium status and quality by building in places such as China. In this case, Porsche is willing to eat the higher costs of exporting cars in order to maintain the quality and allure of being “Made in Germany.” This doesn’t seem to be the end of Porsche’s globalization story, however, as Porsche just announced its plans to build a research and development center in Shanghai, China – the purpose of which to “ensure [Porsche] cars and services reflect the specific needs of markets outside of Europe.” Smart move, considering China is their largest and most profitable market.