Porsche Franchises Seen as Dealers ‘Gold Brick’

Bloomberg News

When Porsche deal­er­ships go on sale, there are gen­er­al­ly “ten buy­ers will­ing to over­pay,” and these lux­u­ry deal­er­ships are meet­ing deal­ers’ expec­ta­tions.

Find out more about a new avenue of lux­u­ry some deal­ers have dis­cov­ered.

When a clus­ter of Min­neapo­lis lux­u­ry-car deal­er­ships went up for sale last year, one brand was prized above the Mer­cedes-Benz and Audi stores.

“Porsche was the cher­ry on the cake,” Jay Hul­bert, the pres­i­dent of the deal­er­ship group that acquired the out­lets, said in a tele­phone inter­view. “The vol­ume is so dra­mat­i­cal­ly dif­fer­ent, yet when you dig into the finan­cial per­for­mance, Porsche meets your expec­ta­tions and then some.”

Auto­Na­tion Inc, Penske Auto­mo­tive Group and Asbury Auto­mo­tive Group Inc, three of the largest new-car retail­ers in the U.S., all have pur­chased Porsche fran­chis­es since 2010. In a peri­od of sparse activ­i­ty for auto-deal­er­ship acqui­si­tions, the deals vault­ed Porsche among the most fre­quent­ly acquired fran­chis­es by pub­licly trad­ed groups dur­ing that span.

“If a deal­er want­ed to sell, I have 10 buy­ers will­ing to over­pay” for a Porsche fran­chise, said Bob Mor­ris, a direc­tor at auto-deal­er­ship bro­ker­age Tim Lamb Group LLC.

While some Porsche afi­ciona­dos chafe at the lineup’s expan­sion, see­ing SUVs and four-door sedans as a vio­la­tion of the brand’s prin­ci­ples, the val­ue and prof­itabil­i­ty of the Porsche fran­chise has changed more dra­mat­i­cal­ly than for any brand in the indus­try in the last 20 years, said Alan Haig, man­ag­ing direc­tor for Pre­sidio Auto­mo­tive, which advis­es deal­ers who are look­ing to sell their stores.

“There aren’t that many sports-car buy­ers in the world,” said Haig, who pre­vi­ous­ly over­saw acqui­si­tions at Auto­Na­tion, the largest U.S. auto-deal­er group. “Many Porsche stores were bought almost as a toy for the deal­er, for him to have some­thing nice to dri­ve and to go on nice trips. But it wasn’t a seri­ous mon­ey-mak­ing invest­ment.”

That changed when the brand intro­duced the Cayenne SUV, which debuted in the U.S. mar­ket in 2003. Porsche trans­formed from draw­ing wealthy males to attract­ing well-off fam­i­lies who could jus­ti­fy pay­ing $60,000 for an SUV that drove more like a sports car than a truck.

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