New Panamera Sedan Will Test Porsche's Image

With its takeover by VW and now a four-door car, the sports-car icon is risking the defining qualities of its brand heritage

By David Kiley

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For decades, Porsche (PSHG_P) has had two things to thank for its strength: a narrow focus on performance sports cars and an independent ownership. It didn't spread itself thin trying to be all things to all people, and unlike Mercedes (DAI), BMW (BMWG), Jaguar, and other iconic car companies it neither acquired other brands nor allowed itself to be acquired.

But now things are changing on both fronts, and the question is whether Porsche can still be Porsche.

Porsche riled many fans six years ago when it launched the Cayenne SUV. Now the company is getting ready to launch later this year a four-door sedan. This comes at the same time Porsche is being swallowed by Volkswagen (VOWG), joining the VW stable of brands that includes Audi, Bentley, and Lamborghini.

"I don't like the changes because I'm a Porsche purist," says Pat Fallon, chairman of Fallon Worldwide in Minneapolis, whose ad agency handled Porsche's U.S. advertising in the 1980s and early '90s, and BMW's ads after that. "I have no doubt that the car is amazing, because that's what the culture at Porsche demands. But from the standpoint of brand focus, Apple would not be introducing a new dictaphone even if it's loaded with the newest technology."

Tradition of Independence

Wendelin Wiedeking, CEO for 16 years at Porsche until he agreed to retire last month, long promoted Porsche's independence as critical to the company's success and Porsche's image. And by independence, Wiedeking did not just mean staving off a merger. He was also famous for rejecting state subsidies to build Porsches or their engines in Germany. "Why should we take money for doing what we were going to do anyway?" he said when he turned down government incentives a decade ago.

When asked at the 2002 Paris Auto Show if the automaker might be better off financially to be acquired by a larger automaker, Wiedeking said: "And just who has that worked out for so far? I can't think of a single one of these deals that I would have done, whether you are talking about BMW acquiring Rover, Mercedes buying Chrysler, or Ford (F) buying Volvo."

Yet oddly enough, Wiedeking is the author of both moves that now challenge Porsche's long-standing image. The company was forced into the Volkswagen deal because Wiedeking's scheme to buy Volkswagen backfired, leaving Porsche with more than $14 billion in debt it could not handle. Wiedeking's subsequent departure was a foregone conclusion. And Wiedeking was the driving force behind the development of the Panamera sedan, which will hit showrooms starting in October.

Perhaps not surprising, given the reception the Cayenne received back in 2003, the Panamera—which will top $100,000 for many buyers when they add various features—is being greeted with horror by many analysts, writers, and auto buffs.

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