Porsche expects lower profit gains amid huge expenses on EVs, new facilities

Article by Christian Andrei, on February 24, 2016

Porsche, through its CEO Oliver Blume, recently announced that the automaker’s profit growth in the near future might be tempered as a result of its aggressive spending on facilities upgrades as well as research and development costs as the company is preparing to introduce new models in its lineup.

However, Blume told reporters that this slowdown in profit growth is only temporary, as the current spending would ultimately mean an explosive growth period for Porsche once these “many new projects in the pipeline” eventually get to the production line.

Porsche had earlier announced that it allocated 1 billion euros ($1.12 billion) to create the carmaker’s first all-electric car based on the Mission E Concept. The company’s new investment into the electric car sectors is likewise expected to generate more than 1,000 new jobs in its Zuffenhausen factory where the new cars will be produced.

According to Blume, Porsche did exceptionally well for 2015 with its annual reports to be available by March 11. Porsche, the second-biggest division of parent firm Volkswagen’s diversified automotive interests, managed to sell more than 200,000 vehicles last year - which is a company first – boosted by sales of its compact SUV Macan.

This figure translates to a 20% increases in numbers of cars sold when compared to 2014’s figure of 187,000 units.

Lingering US problems

The company is still feeling the effects of the US emissions scandal with CEO Blume admitting that during the Detroit auto show last January, Porsche submitted proposals of replacing catalytic converters and updating the software of 2013, 2014, 2015 and 2016 car models.

Feedback from US regulators is likely to be expected in the coming weeks which would cover the 13,000 Cayenne SUVs with VW Group engines.

Blume is hoping that Porsche’s suspended R&D head Wolfgang Hatz would soon be reinstated as this would be favorable to the company’s developmental efforts for its new lineup. Hatz, along with top engineers, was placed on leave by VW Group’ supervisory board last year in response to the emissions scandal.

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