Ken Schnitzer, owner of Park Place Porsche in Dallas, is a Porsche Board of Regents member, and he is optimistic these days.
Porsche's U.S. car sales jumped 37.2 percent in 2005. But Porsche's SUV, the Cayenne, saw sales plummet 24.9 percent in 2005. The Cayenne's poor performance limited total Porsche car and truck sales growth to just 1.5 percent in 2005.
When dealers are selling cars, they make money. They are happy. Schnitzer says that despite the Cayenne's poor showing, Porsche dealers are happy.
Porsche does not have a dealer council. Instead, it has the Porsche Board of Regents consisting of dealers and company executives, as one member put it, "to keep everyone equal." The members serve two-year terms.
Schnitzer spoke with Staff Reporter Greg Bowens about the challenges ahead for Porsche dealers.
What is the No. 1 thing Porsche can do to help its dealers?
Invest enough money in marketing to build brand awareness and increase sales.
Invest where - locally with the dealers or nationally?
Both. Porsche is a relatively small manufacturer. They have never had such a broad array of products like they do today. Investing dollars in marketing is something that Porsche has never really had to do. So as you get a little bit bigger, you have to find ways to do things a little bit differently.
Now, Porsche dealers are unique in that we don't have to have regional dealer advertising councils. Instead, we get money from the manufacturer to leverage our own advertising dollars.
It's a great co-op program that allows us to tailor our store's message to our specific market. Anytime a dealer can get control of the message for his individual store, he is going to take it.
How satisfied are Porsche dealers?
I think the dealers are extremely satisfied. Porsche has been very forthright in showing dealers their future product plans. They have told us they have a strong product plan and then delivered something new to the dealer body every six months.
I think the dealer body has tremendous confidence that the Porsche brand is going to continue to get stronger over the next several years.
Are Porsche products priced right?
The sales numbers speak for themselves. Porsche has had several record sales years. Clearly customers feel that the price-value relationship is very strong. That feeling is backed up by the high residual resale value of the product as well as the original sales numbers.
But as any dealer will tell you, they always want a more competitive price. But my message to you is that the numbers speak for themselves both in residuals and total units sold. I think that says it all.
We have had record year after record year.
Total Porsche sales were only up 1.5 percent for the year.
Yes. But I think with the addition of the Cayman they should be up significantly in 2006. That coupled with the Boxster and the 911 should make 2006 a significantly better year for Porsche and its dealers.
You are this optimistic even though Cayenne sales have fallen nearly 25 percent?
Cayenne sales have slowed somewhat. You have to remember that the sport-utility market is the most competitive segment that Porsche is in today.
The luxury SUV market is where the money is for most brands. How do Porsche and its dealers become competitive in this arena?
To be competitive in the luxury SUV segment, we will have to have a very aggressive product improvement and replacement plan.
If there is one thing that could help the dealers here it would be to constantly keep updating the Cayenne. You have to keep up with the competition.
Are Porsche dealers getting the right mix of vehicles to sell?
In a luxury brand like Porsche, it's always a fine balance.
The key is to not have too many of any one car. The cars are sometimes a little tight.
We all wish we had a few more, but sometimes you have to be careful of what you ask for.
If you get one too many, it can create as many problems as having too few.
The Porsche Board of Regents is constantly talking to management to refine and get just the right product mix.
It's really an art and not a science. So it is always a work in progress. We continually make adjustments to add or subtract to get the right product mix.