Porsche has relied on currency hedging to protect itself. Can Porsche continue to do so in the long run? What would be your strategic answer for currency fluctuations for Porsche in the future? Case 8.2 Porsche: Fighting with currency swinging19 Porsche’s concern about operating exposure arising from changes in the exchange rate of the dollar can be traced back to heavy financial losses incurred in 1992–3. In one year, Porsche’s global sales dropped by 38 per cent to 14,000 units; in the US, its largest market, Porsche sold less than 4,000 units. The large losses were attributed not only to the global recession in the early 1990s, but also to the weak US dollar.

Founded in 1931 by Ferdinand Porsche, Porsche is a legendary German manufacturer of luxury sports cars. In 1972, Ferry Porsche and Louise Piëch, the two children of Ferdinand Porsche, changed the firm’s legal form from a limited partnership to a private limited company (German AG). An executive board and a supervisory board were set up, with executives from outside the Porsche family on the former and members mainly from the Porsche family on the latter. As of 2007, the extended Porsche and Piëch families controlled all of Porsche AG’s voting shares.