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QUESTION & ANSWER

Ex-Porsche CEO: Cayenne spiced up sales

Peter Schwarzenbauer: Since the launch of the Cayenne, Porsche has “attracted a lot of new people to the brand.”
Peter Schwarzenbauer left as CEO of Porsche Cars North America Inc. on April 1 — exactly five years after he took the post. On Tuesday, April 8, he became the board member for sales and marketing at Audi AG in Germany.

Schwarzenbauer arrived in the United States to launch Porsche's first SUV, the Cayenne, which drew harsh criticism from some Porsche traditionalists who wanted the company to sell only sports cars. He says the Cayenne has helped boost Porsche sales significantly and has stabilized dealer business.

Schwarzenbauer says his most important accomplishment was building a better relationship between Porsche and its dealers. Dealer profits have grown significantly, as has dealer investment in facilities. Schwarzenbauer spoke with Staff Reporter Diana T. Kurylko.

What has been the most significant factor in Porsche's U.S. sales increasing from 21,318 units in 2002, when you started, to 34,693 vehicles last year?

The biggest factor was that we started to build up a strong and trustful relationship with our dealer body. I and everyone on the team invested a lot of time and energy into becoming a very predictable, open-minded business partner and not the guys sitting here in Atlanta telling the dealers what to do. It is the foundation of what drives the company. We were right behind Toyota and Lexus on the NADA dealer survey.

The other part is that the Cayenne was more successful than we originally planned.

Cayenne sales have dropped from a high of 18,117 in 2004 to 12,547 last year. What happened — a natural decline or an unexpected drop?

It is more of a natural drop. If you look at the SUV segment in general, you can see a 15 to 20 percent effect — whatever is new sells at this higher level and then enters a normal life cycle. We were not awfully surprised about this with the Cayenne. We have watched this happen with other brands and cars in this segment.

You came to North America just as the Cayenne was being introduced. Were people wrong when they said the Cayenne wasn't a Porsche and would fail?

Definitely yes. People were saying, "We don't know the effect Cayenne will have on the other models." Since we launched the Cayenne in 2003, we increased 911 sales by 32 percent and attracted a lot of new people to the brand. A lot of people now have a sports car in their garage because of the Cayenne.

Why has the Boxster lost popularity? Can Porsche hope to bring it back up to the nearly 10,000 units a year in the United States, or was that a unique period?

In my eyes, the 10,000 sales were unique and reached in the unique environment of the dot-com era, when everyone thought they were dot-com millionaires. Boxster sales are now back to normal levels.

Are last year's sales of 12,493 911s the maximum Porsche can sell in this market?

There is still room to grow. If you look at the general development in this country, we will have more and more households with income over $200,000 and more people coming into the situation where they can afford the 911.

What did the Cayman do for Porsche in the United States?

We saw this roadster segment decline for three or four years. We wanted to counteract that with a different type of Boxster, and the Cayman (coupe) stabilized our midengine segment sales quickly.

How many Panamera sedans can you sell in the United States next year? Is the timing to launch next year bad considering sensitivity about the dollar and looming recession?

The dollar is not such a huge issue. We have aggressive hedging. It is not nice for a German car manufacturer to see it going to $1.60 to the euro, but that will not affect our launch.

I do not know the volume. We haven't finalized pricing. The big picture we announced is that we hope to sell 20,000 Panameras worldwide and about 30 to 35 percent in the U.S. based on Porsche (total vehicle) sales levels.

Have you used any incentives in the five years you have been here?

No incentives.

Does Porsche need to rethink that strategy?

I do not think so. We've proved that this is the right way. The other ways build short-term sales and problems. It is totally wrong to incentivize.

What is the current dealer return on sales? At one point you were at 2.5 percent?

We are currently at 2.8 percent, and that is moving in an even better direction. We did a lot of consulting work at dealerships to improve internal processes and cut costs. That is helping the profitability situation.

What is your proudest accomplishment at Porsche?

The proudest accomplishment is not the numbers. Where I feel extremely satisfied is how many dealers embraced the direction of Porsche and believed in us and invested a lot of money in new facilities without support on our side.

Do you have investment figures?

In the last 36 months, they've invested $300 million.

Give us an update on the move to exclusive or upgraded facilities.

We are selling 78 percent of our volume through Porsche corporate identity stores. Five years ago, this number was 35 percent.

Are you at a satisfactory dealer level now?

We added 12 dealers 1.5 years ago and have kept it stable at 200 dealers in the U.S.

Do luxury makers have to operate differently in the United States?

What most luxury brands have to learn is the buying process is much different than in Europe. Most people (in Europe) choose a luxury brand, specify a car and wait three to four months. Here you look around a (dealership) lot and want to take (a vehicle) home. It is much more spontaneous than in Europe. You have to learn what kind of cars your buyers want. Here a lot more depends on your decisions and getting supply and demand in the right balance.

It is important to have a tight supply?

I am strong believer that you always have to be a little bit on the short side. 

You can reach Diana T. Kurylko at dkurylko@autonews.com

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