Porsche To Break Ground Today On Leipzig Expansion

Porsche will break ground this week on a 500-million euro ($689 million) expansion project at its factory in Leipzig.

Porsche builds the Panamera four-door coupe and the Cayenne sport-utility vehicle in Leipzig and is Porsche’s only assembly plant outside its home state of Baden-Wuerttemberg. The two models accounted for three quarters of Porsche’s 10,560 global sales last month.

The addition of paint and body shops will nearly double investment at the plant, home to the manufacturer’s two best-selling models.

“There was nothing but green fields when we started out here,” Siegfried Buelow, head of Porsche’s Leipzig factory, said in an interview with Bloomberg. “We have excellent conditions in Leipzig. We’re well aware of our advantages here,” said the executive, who joined the company in 2000 when construction of the plant started.

The planned spending at the facility will add to the 277 million euros invested there over the past decade, according to the office of Leipzig mayor Burkhard Jung. That spending would outpace the 350 million euros that Porsche has said is earmarked for facilities in western Germany.

“Leipzig is building the models that promise higher growth potential for Porsche” than sports cars like the Stuttgart- built 911, said Willi Diez, head of the Institute for Automobile Industry, a state-funded think tank in Nuertingen. “The enlargement will boost the factory’s strategic importance.”

Porsche, which is seeking to merge with Volkswagen, is seeking to boost sales to about 140,000 vehicles next year from an estimated 120,000 in 2011, benefiting from revamped versions of the 911 and Boxster roadster. Porsche is aiming to increase deliveries to over 200,000 by 2018 and expand the number of model lines to seven from four.

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