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Porsche Is Volkswagen’s Most Profitable Brand
Volkswagen, world's second largest car maker makes most of its profit not from mainstream, mass market cars, but from luxury brands such as Porsche and Bentley.
A Businessweek report has published data unearthed from VW annual report which reveals that the group's most profitable brand is Porsche. The Stuttgart based company makes a profit of $23,000 for every car it sells.
That's a profit margin of 18 percent; a very healthy figure. Following closely is Bentley which brings in about $20,000 per car.
Lamborghini and its direct owner Audi, meanwhile, make considerably less profit, with over $5,200 for every car sold.
As for Volkswagen branded cars themselves, they make just $850 per car, which is a paltry 2.9 percent.
To answer the obvious question, which is how does Porsche and even Bentley make so much profit, the simple answer is platform sharing.
Porsche and Bentley, compared to other VW brands, have fewer platforms which is shared by all their cars and also with other VW cars. Porsche Cayenne for example; one of the company's best selling car shares its platform with Audi Q7 and VW Touareg.
Profitability also increases in case of Porsche because it sells far greater number of cars compared to a boutique brand such as Lamborghini, while still being more exclusive than Audi, which means its customers are ready to pay more for the brand name.
Audi sells more cars, but it has plenty of competition from Mercedes-benz and BMW and also has far more models than Porsche built on different platforms.
As for VW branded cars, margin of profit are always low on mass market cars like say, the Passat or the Jetta. To add to the pressure, the car market has not fully recovered yet from the last depression which has far more severely hurt customers of regulars cars than wealthy buyers of luxury brands.
All said and done, however, if VW wants to beat Toyota to become the number one car maker in the world, it is the number of cars sold and not the money it makes from cars that matters. And for that VW has to rely on its Golfs and Jettas to sell in huge numbers.
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