Porsche 2004 Annual Report Download - page 14

Management Report10
German Economy leaves much to be desired
The global economy recovered strongly again in the reporting year.
Japan continued to enjoy an upward trend, growth was significant in
the USA and in China as well the impetus for growth was unbroken,
despite cautious exchange rate adjustments.
By contrast, the economy in the eurozone was slowed by the rise in
oil prices that persisted since the end of 2003. The higher cost of
crude oil resulted primarily from a strong increase in demand from
threshold countries such as China. Thanks to a fall in the Euro ex-
change rate in the second half of the reporting year, exports picked
up again after a temporary weakness, but this was not sufficient to
give far-reaching impulses for growth.
The key problem in Europe was weak internal market demand. With
sales prospects subdued, companies were reluctant to increase
capital expenditures although profit levels were high. Above all, pri-
vate consumption remained below expectations, due to a high level
of unemployment.
This situation applied particularly in Germany. Although the economy
clearly profited from increasing exports, there was scarcely any
economic recovery during the reporting year. Domestic demand has
not lived up to expectations for some years, and it would seem that
external stimuli are having less and less effect; they have certainly
failed so far to initiate any significant recovery. The purchasing power
Automobile markets worldwide have still not made a consistent recovery,
but all Porsche models have been outstandingly well received by customers.
of private households was lowered by severe increases in the cost
of heating oil, fuel and other sources of energy. Added to this, poli-
tical uncertainty was caused by the Federal German government’s
unexpected action aimed at making an election necessary; this
had a further retarding effect on private consumption and capital
expenditures.
New Record Year for Porsche
Although the international economic climate improved, this could
not be said for the automobile markets to any significant extent in
the reporting year, as before. Porsche nevertheless succeeded once
again in achieving record sales. Growth was inspired by the new
generation of sports cars: the 911 and the Boxster were extremely
well received by customers all over the world. The Cayenne too
remained in strong demand. This sport utility vehicle exhibited es-
pecially dynamic growth in export markets in which Porsche’s
presence has so far been only small.
Porsche’s top selling model in the reporting year was again the
Cayenne, of which 41,884 were sold following 39,913 in the pre-
vious fiscal year. With 17,355 sold, the Cayenne S remained the
version in strongest demand. There was also keen interest in
the six-cylinder version, of which 17,362 were sold. Sales of the
Cayenne Turbo were most gratifying in volume, at 7,167 units,
giving it approximately a 17 percent share of total Cayenne sales.