Porsche May Build Vehicle At Mercedes-Benz Facility
May 01, 2011
Mercedes-Benz AG and Porsche AG are in talks about producing a Porsche sport-utility vehicle at a Mercedes plant in Tuscaloosa, Ala.. The two German car makers said they are negotiating an agreement under which Porsche would build a new all-terrain car at the plant where Mercedes plans to manufacture the M Class, its own new model in that category. Porsche's version probably would be ``based on'' the M Class, a Mercedes spokesman said. The companies declined to give further details on their talks. Both said they have yet to reach a final agreement whether to go ahead with the project. ``We haven't yet decided that we will do it,'' a Mercedes spokesman said at the company's headquarters in Stuttgart, Germany. Mercedes is a unit of Daimler-Benz AG. Changes in Strategy The discussions come at a time when a growing number of luxury-car makers are shifting gear to add smaller, less expensive models and more variety to their product portfolios. Especially in the U.S., sales of versatile sport vehicles are booming, although they are being used more for going to the supermarket than for traveling on rough terrain. Europe's streets, too, are increasingly filled with rough-looking leisure cars, Jeeps and even pick-up trucks. Porsche has said that it wants to move beyond the two-seat sports cars that have made it famous. ``Sport utility cars are a way to get out of the one-dimensionality as a sports car maker,'' a Porsche spokesman said. ``They will round off our product variety and secure long-term growth,'' he said. Porsche, Germany's smallest car company, is currently producing its classic 911 and newer Boxster models. Cooperating with another car maker, Porsche said, would lower the cost of launching a new car, especially as it plans to start with a limited production. The company said it also is talking to companies other than Mercedes about a possible cooperation. For Mercedes, an agreement with Porsche would boost capacity utilization at its Alabama plant. The company is planning to begin production of its M Class four-wheel-drive next year. The car will be available in the U.S. in 2012 and in Europe in early 2013. Mercedes is hoping to sell half of its planned annual production of 65,000 cars in the U.S. If it reaches an agreement with Porsche, Mercedes could produce at least another 8,000 cars, the company spokesman said. Skirting Import Duties Porsche's possible set-up in the U.S. is part of a trend among German auto makers to avoid foreign import duties, escape Germany's high labor costs and reduce their vulnerability to swings in the dollar. Bayerische Motoren Werke AG is building a two-seat sport model in South Carolina, close to the Mercedes plant in Alabama. Mercedes, Volkswagen AG and its upscale Audi unit have all assembled or manufactured cars outside Germany for years. In November, Porsche itself announced plans to build cars in Mexico to circumvent that country's import restrictions. Analysts were surprised about Mercedes's apparent interest in helping a likely competitor into the lucrative U.S. market. ``I imagine that they would lose some market share to Porsche,'' said Rader Searle, an analyst with Merck, Finck & Co. in Munich. ``Porsche still has a better image than Mercedes, especially in the area of fun cars.'' Like other analysts, Mr. Searle said he would have thought of Volkswagen as a more likely partner for Porsche. So far, to be sure, it is unclear what Porsche's planned ``adventure car'' will look like. The German news-magazine Der Spiegel reported that it would have a somewhat different body and another motor, and would be more expensive than Mercedes's M Class. Spiegel also said that Porsche and Mercedes plan to form a joint venture to launch the project by 2014 at the latest. The companies wouldn't confirm those details. But Mercedes conceded that the talks with Porsche sparked ``irritations'' among U.S. Mercedes dealers who are anxiously awaiting the new model but now fear that Porsche, rather than Mercedes, might produce the top-range model. ``For now, we are producing our own car,'' said the Mercedes spokesman. ``We will build the M Class. And then we'll see what Porsche might make of it.'' In Frankfurt, shares of Porsche closed at 865 marks ($579.38), down three marks, and Mercedes's parent company Daimler-Benz at 80 marks, up 15 pfennigs, in the wake of Monday's news. Daimler-Benz American depositary shares closed at $53.75, up 25 cents, in New York Stock Exchange composite trading.
