More than 20% of stores plan renovations in 2014

Porsche dealerships expand as brand's new-car sales rise

More than 20% of stores plan renovations in 2014

Joe Lawrence: Dealers are "willing partners" in Porsche's growth plans.
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Porsche's new-car sales have more than doubled in the past four years. Now Porsche dealerships are expanding to accommodate the extra traffic.

More than 40 of Porsche's 189 dealerships will expand, upgrade or build new facilities in 2014, said Joe Lawrence, COO of Porsche Cars North America. That's an acceleration from last year when a dozen or more dealerships were new or renovated.

"We're asking [dealers] to prepare for the growth with their facility plans," Lawrence said. "We've got many that are already in place and others that we're working with. When we've got growth plans like we do, and the dealers have seen evidence of the strategy coming to fruition these past couple of years, we've found them to be very willing partners in building together with us for the future."

Porsche has targeted sales of 50,000 vehicles in the United States by 2018, though it appears the brand will hit that goal much sooner. In 2013, U.S. Porsche sales jumped 21 percent to 42,323. Sales are expected to grow significantly this year with the new Macan mid-sized crossover slated to arrive at dealerships by May or June.

In 2012, Porsche executives met with dealers individually to review store capacities and determine expansion or improvement plans. The executives reminded dealers that the company also is investing in a new headquarters in Atlanta and customer experience centers in Atlanta and Los Angeles.

Of the 189 dealerships, all but nine or 10 satisfy Porsche's facility requirements or have plans in place to make changes, Lawrence said.

The expansions and improvements are generally justified by Porsche's growth, said Mike Sullivan, who owns Pacific Porsche in Torrance, Calif., and is a member of the Porsche Board of Regents. Dealers already have the company's facility requirements as part of their plans.

Dealers "know what to expect," Sullivan said. "It's already been dealt with, good or bad, right or wrong." He added that Porsche executives have "never been stupid" with their requests.

Don Hicks, president of Shortline Auto Group in Aurora, Colo., is one of the dealers expanding this year. Hicks said he initially built his Porsche store big anyway, but he just bought the property next door to expand in anticipation of the new products.

"We don't know how high up really is," Hicks said. "The new products they're bringing to market in new segments are going to increase the brand awareness. The fact that we will soon have three vehicles with four doors that are more year-round vehicles takes the peaks and the valleys out of our business model and makes it more sustainable for all the dealers around the country."

Hicks noted that he has already sold his initial allocation of Macans and has 17 more customers who have put in orders. This year, he will remodel his showroom and start a remodel of the building he just bought. That will become a certified used-vehicle showroom able to display as many as 20 cars inside. Hicks also will add another four or five service bays to the seven he already has.

"I'm very bullish," he said.

Lawrence reiterated that the company aims to accomplish its growth plans with its existing dealership network. Porsche did award a dealership in South Florida late last year to Penske Automotive Group, and Lawrence said the company could add one or two more stores in high-growth areas. But consolidation in other areas could balance that.

"We remain committed to that philosophy of greater throughput through roughly the same number of dealers that we have today," Law-rence said. He said consolidation opportunities "are probably pretty slim at the moment."

Porsche already has reduced its dealership count from more than 200 about five years ago.

Dealers expressed confidence that the inventory-constrained Porsche will stick to its current footprint.

Sullivan said, "They don't have enough cars" to expand the network. "It will be only if there's a real specific need."

You can reach Amy Wilson at awilson@crain.com.


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