In 2005, further updates were substantial enough that Porsche internally identified the Boxster as a new 987 model. The 987s were more powerful than the 986s; engine output increased yet further in 2007, when both Boxster models received the motors from the corresponding Porsche Cayman variants.
Production of the 986 began at the former Porsche 928 facility in Stuttgart, Germany in 1996. Valmet Automotive also manufactures Boxsters under contract to Porsche at a facility in Uusikaupunki, Finland. The Boxster was Porsche's biggest volume seller from its introduction in model year 1997 until the company introduced the Cayenne utility vehicle in model year 2003.
The Boxster's name is a portmanteau of the word "boxer", referring to the vehicle's horizontally-opposed or "boxer" engine, and the word "roadster", referring to the vehicle's convertible top.
Harm Lagaay's Boxster design study stimulated a commercial turnaround for Porsche after several difficult years of falling sales.
The first generation of the Boxster whose visual appearance was heavily inspired by the Porsche Spyder and Speedster as well as the Porsche 550 Spyder. The Boxster was released ahead of the release of its big brother, the 996. Through consultation with Toyota, Porsche greatly decreased the cost of manufacture, and introduced large scale sharing of components between its models. The 986 Boxster had the same bonnet, front wings, and distinctive 'fried-egg' headlight units as the 996. Its original 2.5L M96 engine shared the same architecture with the 3.4L engine used in the 996. Many believe the combination of the new Boxster / 911 styling and the reduced build costs through component sharing saved Porsche from being acquired by another car company.
All 986/987 Boxsters use the M96 water cooled, horizontally opposed ("flat"), six-cylinder engine. The M96 is the first completely water-cooled engine used in a production non-front-engined Porsche. In the Boxster the M96 is placed in a mid-engine configuration as opposed to the rear-engine placement in all 911s. The combination of the M96 and a mid-engine layout provide a low center of gravity, smoothness throughout the rev range, near perfect weight distribution, and neutral handling characteristics. Early production M96 engines had a small but significant number of engine failures due to cracked or slipped cylinder liners, but since a minor redesign in 2000 these problems have been resolved.