Porsche's plan to increase U.S. sales is on track
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Mike Sullivan Age: 59 Dealer since: 1985 Dealership: Pacific Porsche, Torrance, Calif. Other brands: Volkswagen, Audi, Subaru, Lexus, Toyota, Scion, Fisker Average monthly sales at Porsche dealership in 2012: 400 new, 320 used Quote: "The thing we all need to do the most is learn how to take care of a female consumer better." Photo credit: MARK RECHTIN |
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Porsche is forecasting that its U.S. sales will be 50,000 by 2018. That would be up 43 percent from the 35,043 units sold in 2012 and roughly double its 2010 level.
The introduction of the 911 and Boxster last year and the promise of more vehicles coming this year are spurring U.S. sales momentum.
But with sales growth comes the need for dealership improvements, expanded service bays and an improved understanding of providing service for female customers.
Staff Reporter Jamie LaReau spoke with Mike Sullivan, a member of the Porsche Board of Regents and owner of Pacific Porsche in Torrance, Calif., about the current state of Porsche and what's ahead for the brand.
Porsche wants to double its sales by 2018. U.S. sales in 2012 were up 21 percent to 35,043. Is that on track?
We're absolutely online. When they first said that, we all said, "Yeah, right." I think every dealer in the country has bought into that we're moving there arithmetically and practically with a plan. We're moving there and expanding the lineup as you'd expect.
Inventory was tight in 2012. Did it improve enough to help dealers fulfill sales goals?
With all manufacturers, you want to be a little tight. With a prestige brand like Porsche you want to be 5 to 6 percent tight and a slight wait to own one. They shouldn't be laying around for you to come pick out one of six or 10.
So inventory did improve. The Cayenne is the model that's in the shortest supply in general. But they got some supplemental production midyear that did help.
Could you sell more if you had more?
Absolutely, we could have jumped by 10 to 12 percent more if we'd had more cars.
What major issues do Porsche dealers face this year?
The projection is it'll be a very positive year. There are no big storms on the horizon. We'll continue our segue and start delivering Caymans in 2013. We'll also deliver the derivatives of all the 911s this year -- the wide bodies, the turbos, the all-wheel-drive -- and we'll be filling out the rest of the lineup. We'll continue to launch diesels, hybrids and plug-in hybrids. We'll have two plug-in Porsches eventually that get 70 mpg-e.
The franchise is facing up-pricing a little. A lot of these cars that they replace are higher priced. So we're moving the brand up but looping back around with Boxsters, Caymans and Macans -- the Macan will have a great proposed price on it, and we can't wait for that car.
Porsche has more new vehicles coming, including the 918 Spyder hybrid sports car and the Macan crossover, which U.S. dealers probably will get early next year. There also has been talk about a sports car slotted between the 911 and the 918 Spyder, plus a sedan smaller than the Panamera. What is the status of those vehicles?
The Macan is the small SUV, and it's the absolute target of where the SUV market should be going.
The 918 Spyder is on the other end. It's a halo vehicle and totally aspirational. It's a race car. So there's no volume there; it's all brand imaging.
Those are approved and coming.
I don't think the sedan is approved yet. But we believe the sedan is coming. The sports car is also not approved, but it sure looks like they are moving the lineup in that direction.
We've moved the lineup up and filled in behind with a Boxster and a real Cayman. You can move from a 3-year-old 911, and now when you come in to shop again Boxsters and Caymans are on the shelf for you to consider. Then there's the 918 that is in the stratosphere at $900,000.
It sure looks like they're setting the model lineup up for a car in between the 911 and 918. That's where Ferrari lives.
How are Porsche dealers doing with dealership improvements?
We are in the process. Porsche expects us to continually upgrade, and for the most part dealers don't have a problem with it as long as you can do it as build, stop, then build and have a grace period, which Porsche has let us do. If we double our sales, the facilities will have to change demonstrably. The service departments will have to be expanded.
But as dealers are selling cars, they're making money; and when they're making money, they don't mind spending money.
Are you disappointed that the small, entry-level sports car idea was killed?
There was talk of a sub-Boxster, a $40,000ish car. Where we're going, Porsche doesn't need to do that, it might make more sense for Volks-wagen and Audi. I think it starts to stretch the brand too much. So the entry-level sports car that has long been rumored, it's fine that it's off the table or a ways down the road.
What vehicles are missing in Porsche's lineup?
Probably none. When the ones coming arrive, it's probably going to be a pretty full lineup.
We have five engines on a Cayenne. They'll continue to do things like that where they'll continue to fill out each model. We don't need another SUV, big sedan or other models.
Are there any specific new powertrains you'd like to see?
As we go to CAFE and car requirements in the next few years, we will continue to change with the speed of light. Porsche doesn't need to jump to hydrogen. We'll continue to get more out of diesels or more out of our plug-in hybrids, so I don't see a new powertrain on the front for us.
Are Porsche dealers making money on new-car sales?
Yes. They are making money, fighting for cars and fixing up facilities and showing up for meetings. When we behave like that, you know we're here because we want to be and we're here to participate.
How can Porsche dealers improve their service business?
The thing we all need to do the most is learn how to take care of a female consumer better. Women behave differently and have different expectations than I do. Women will put up with things that I will or won't and vice versa. Because we came from a German racing heritage, we were historically a guy car.
Our cars now are very geared toward the female market, and yet we have our behavioral practices that are still guyish, and women tell us that and remind us constantly.
For example, if I have to check the oil level and it takes me two minutes and I get my hands dirty, I don't like it, but I'll do it. A woman will say, "I won't do that." A small, high-performance engine is made to burn oil so you might have to check it between service visits. It takes more to own and live with a Porsche than a Chevrolet Suburban. You get women coming in saying, "I don't want to do that."
In the new 911, you push a lever and it tells you what the oil level is. But to get to that screen is a bit cumbersome. A woman will be less likely to work through three or four screens than a guy. So the manufacturer has to build it simpler, and we have to do a better job of explaining it in the showroom.
What are Porsche dealers doing to attract more F&I business?
As Porsches go down in price, it probably forces us to be cognizant that the payments be in line with what the competition is doing. With the middle and lower end of the market, it's probably more sensitive to F&I by design.
What do you hope to accomplish as a member of the dealer council?
Continuing to build a sustainable model to achieve this sales growth. You do that with constant improvement like we have now with the Cayenne and the Macan.
Sustainability comes from proper model cycles and proper pricing ladders brought out at the right time in the marketplace.
If the Cayenne needs to have better miles per gallon, for instance, it can be a plug-in also. So now you have a two- to three-year cycle where a Cayenne would make sense to sell in that era.
Does the certified pre-owned program work for dealers?
Absolutely. It helps us sell really nice pre-owned cars. It brings them back in for service. It trains customers to come to me, so they're in my shop twice a year and likely to come back to me for future business.
How could it be improved?
We're constantly looking at our price. We're always analyzing cost and effectiveness. But in general we do a very good job of it.
What does Porsche need to do to help you sell more vehicles?
They constantly need to push themselves and be aggressive with residuals on leasing, and they need to have their finance company continue to be a marketing arm to us. The finance arm needs to be integrated with the factory arm, and we are. We have great progressive meetings making sure we understand the competition. We used to not have any competition when we were a 911 company. But as we become a company with some spillover -- the Cayenne, for instance, changed the business model -- we have to understand the market and make sure we're constantly competitive.
