Porsche Franchises Seen as Dealers ‘Gold Brick’

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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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