Porsche Chief Executive Wendelin Wiedeking placed a risky bet in 1998 when he decided to produce a sport-utility vehicle for the then-ailing German sports-car maker. Porsche aficionados and family shareholders alike cringed at the thought of Porsche's name being associated with bruising, bulky, off-road trucks. However, one year after its release on the market, the Porsche Cayenne SUV is powering record sales and raising expectations for the auto maker's next big product launches for 2005 and beyond.

With the help of the Cayenne SUV, Wiedeking has transformed Porsche into the world's most profitable auto maker. The company's net profit margin of 10.1% outpaces even Japanese auto manufacturers Nissan and Toyota. However, once the novelty of manufacturing the world's fastest SUV has subsided, Porsche will need to maintain sales of 30,000 or more Cayennes a year just to keep up the pace.

Expanding Porsche's brand identity to include bulky sport-utility vehicles might have been risky business, but the alternative of surrendering market share to tough competitors like BMW and DaimlerChrysler would certainly be fatal--especially in the highly competitive auto industry.

(January, 2004)