FRANKFURT, Germany (Reuters) - Porsche AG celebrates the 50th anniversary of its first 356 model this weekend with an extravagant cavalcade through the streets of Stuttgart. Porsche will mark the jubilee with a reception Friday, followed by a procession of more than 400 Porsche cars through the sleepy southern German city, where it has produced more than one million cars since moving there from Austria in 1950. Porsche has much to celebrate about the past five decades, with its transition from being a small post-war provincial enterprise to one of the world's most famous sports car makers. Since its first 356 model gained public road use approval from Austrian authorities on June 8, 1948, Porsche cars have been favorites of the rich and famous, from movie icons James Dean and Brigitte Bardot to sporting legends Michael Jordan and Pete Sampras. The cars, which have followed a clear line from their original designs, have also piled up more than 22,000 racing victories in half a century. In the first two years of producing the 356, Porsche turned out a modest 53 cars in the Austrian town of Gmuend. In 1950 the company returned to Stuttgart, which its founding father, Ferry Porsche, had left during World War II. Cars were in Ferry Porsche's blood. His father, Ferdinand, had built Volkswagen's Beetle, and Porsche remained tightly linked to VW down the decades by mechanics and family ties. The bond persists today. VW's current chairman, Ferdinand Piech, is a nephew of Ferry Porsche, who died in March aged 88. Piech is also a major Porsche shareholder and all of Porsche's ordinary shares are held by the Porsche and Piech families. When Porsche wallowed in financial difficulties in the early 1990's and looked like a takeover candidate, the VW chief said: "As long as I live, Porsche will remain independent." Porsche's first model owed much to VW. With a silver aluminium body, the car was powered by a four cylinder 1.1-liter air-cooled VW Boxer engine. Its headlights, axle, wheels and chrome hub-cabs also followed Ferdinand's designs. Although critics said the 356 resembled an upside-down soap dish, the company sold 78,000 of them before ending production in 1965. The previous year Porsche had introduced its new 911 model, featuring an air-cooled six-cylinder engine. It was to become the backbone of the company's sales and has already had the longest production run of any sports car model in the world. Last month, Porsche added a sport utility vehicle to its existing models -- the traditional 911 sports car and a two-seater Boxster roadster. Porsche's kinship with VW again played a major role, as it agreed to develop and produce sport utility vehicles jointly with Europe's largest car maker. The move to develop a four-wheel drive, off-road vehicle together could help them push into one of the car industry's fastest growing sectors. They aim for the vehicles to be in dealer showrooms by 2002. If Porsche builds 20,000 new vehicles a year as planned, it would increase its sales by 50 percent. The company said it wants to increase its sales by about 10 percent to 4.5 billion marks ($2.48 billion) in the 1997/98 business year and has set its sights on selling at least 38,000 vehicles a year. It has not been all smooth sailing for Porsche. In the early 1990s, it piled up losses over three years and nearly went out of business at one point, despite strong sales. Porsche's fortunes seemed to revive with the appointment of its present management board chairman, Wendelin Wiedeking. In 1992, he took on two former managers from Toyota Motor Co., at the time the world's most efficient car maker, and a transformation in productivity followed. Output per worker almost doubled to about 9.1 cars a year in 1997 from around 4.9 at the beginning of the 1990's. At one stage Porsche had virtually no identical parts for its different models, now 38 percent of parts for its 911 and Boxster are identical. Its jittery financial position of the early 1990's has also been turned around, and the company made a pre-tax profit of 163.5 million marks ($90 million) in the year 1996/97. In March it revised its 1997/98 first-half earnings, saying profit after tax for the first six months to Jan. 31 had risen to 69.7 million marks ($38.4 million) from 38.4 million marks ($21.1 million) in the same period the previous year. "Porsche's future looks extremely bright," according to Enskilda Securities analyst Lothar Lubinetzki. "Entering the off-road segment will transform the company, bringing higher sales and more stable earnings."