Fred Schwab traveled to Germany last month to sit in a big box to make sure his voice was heard.
As president of Porsche Cars North America Inc., Schwab wants designers at Volkswagen AG to understand fully what American customers want in a luxury sport-utility. The box, Schwab explains, is the early mock-up of the sport-utility's interior cabin.
'I sat in the front of the box to make sure it had plenty of room,' Schwab says.
'Then I told the designers to sit in the back. I said, `You should have as much room back there as you do up here.' '
Schwab has good reason to sweat the details. Porsche is making a huge bet that the sport-utility, which is due in the 2002 model year, will be a hit.
VW and Porsche are jointly spending $600 million to develop a new sport-utility - the first for either automaker. Moreover, American Porsche dealers plan to invest $250 million to upgrade facilities and create 40 to 50 Porsche-only dealerships. Ten of the franchise's 206 dealerships are exclusive.
VOLUME WILL DOUBLE
'We will see sales of 20,000 this year,' Schwab says. 'I've told the dealers to expect that volume to double. ... (The sport-utility) will represent our long-term survival,' Schwab said. 'It will guarantee our independence.'
For Porsche, the sport-utility holds a two-fold promise. The small, independent sports car franchise finally will get a product that will make it less susceptible to dips in the economy. That means more sales per store and higher profits. The past two years have seen record profits for Porsche retailers, Schwab says.
'If you had told me 10 or 12 years ago that someday Porsche would have a large number of stand-alone dealerships, I would have laughed,' said Schwab, an accountant who took control of the U.S. sales subsidiary during Porsche's dark days in 1992.
The recession of the early 1990s saw Porsche's U.S. sales deflate to 3,729 units in 1993.
In the past, Porsche has been teamed most commonly with Mercedes-Benz franchises and Audi dealerships. Some exclusive Porsche stores came about only when Mercedes embarked on its own dealership upgrade plan from 1995-98. The effort caused some Mercedes dealers to step out of dual store locations, leaving Porsche franchises on their own.
The new Porsche product will offer different engine options, including a six-cylinder and a V-8. Volkswagen's version, which is expected to be decidedly upscale by VW standards, could offer additional engine options.
Schwab would provide no product details, except to say, 'It will be a true off-roader, as well as a performance vehicle.'
While the stakes are high for Porsche's North American subsidiary, the plan is a marginal one by industry standards. Porsche hopes to sell only 20,000 of the new 4x4s annually. That is less than 1 percent of total sport-utility sales in the United States. It represents a larger share of the luxury sport-utility market, but even that segment is rapidly growing.
'The sport-utility market is moving into new segments,' Schwab says. 'But I think the industry has yet to get into the area of performance.'