Porsche’S first-quarter earnings jumped as luxury carmakers continued to show gains despite a slowing global economy.  

Operating profit rose to 1.84 billion euros (S$2.7 billion) while revenue increased to 10.1 billion euros in the first quarter, the company said on Wednesday (May 3). That’s roughly 25 per cent higher than last year, when supply-chain disruptions were dragging on the industry.

High-end carmakers like Porsche, Mercedes-Benz and BMW have proven to be less exposed to softening global demand and inflation that is hitting consumers. Porsche, which reiterated its 2023 guidance that margins would stay in a range of 17 per cent to 19 per cent, said its return on carmaking was 18.2 per cent in the first quarter.

Automakers are still getting a boost from pent-up demand after supply-chain issues capped output, though uncertainty about global demand persists. Stellantis’ first-quarter sales climbed more than expected thanks to strong vehicle prices and higher shipments of models like the Jeep Compass.

But pressure on carmakers remains, particularly following Tesla’s decision to cut prices on its EV lineup, a drag on mid-segment electric models. Yet, for luxury carmakers like Porsche, analysts are watching whether they can raise prices more to offset higher input costs.

“They key thesis on Porsche is that they can push pricing in this environment,” said Bernstein analyst Daniel Roeska. “If that’s not happening, that’s the worry.”

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The maker of the 911 sports car, which remains majority owned by parent Volkswagen since last year’s listing, is targeting a move further upmarket to battle Ferrari. The German company is planning an all-electric high-performance SUV above its battery Cayenne, slated for around 2026, as part of a plan to boost operating margins to more than 20 per cent.

Porsche’s financial services unit was less immune from the impact of inflation and rising interest rates. In the first quarter, the division saw its operating profit fall to 86 million euros from 102 million euros on the valuation of interest rate hedges and derivatives, and said the share of leased and financed new cars declined to 42 per cent from 46 per cent last year. BLOOMBERG