ATLANTA -- Porsche's U.S. boss expects the luxury brand's sales to keep climbing, but not enough to warrant a North American plant.
"We don't have any plan to have any production here in the United States because the volume doesn't justify that," Porsche Cars North America CEO Detlev von Platen said.
Porsche will continue to produce its vehicles exclusively in Germany, von Platen said. But U.S. sales are growing and could break the 50,000 mark in 2015, three years ahead of target. This is a big year for Porsche as it opens its $100 million U.S. headquarters and customer experience center here, with another center to follow in Los Angeles. The Atlanta facilities represent the brand's largest investment outside Germany.
Von Platen, 51, spoke with Staff Reporter Amy Wilson.
Q: What role will the headquarters and experience center play for Porsche?
A: It's all about the experience. The visitors who come here will experience a brand and our products in a way they have never done before. They will be able to practice their driv-ing skills on a 1.6-mile test track. They will be able to use a state-of-the-art conference center. Our 189 dealers have been included in this project from the very beginning.
How will dealers be able to leverage the experience centers?
By incorporating the whole sales process with the experience. They can talk to the customers and offer them the possibility to come to One Porsche Drive: Test drive the car; get some knowledge about the brand; smell, touch, feel what we're doing with Porsche. [Even] get the delivery of the car done here at One Porsche Drive.
What can we expect from Porsche sales in 2015?
We are now 17 percent ahead of last year [through April]. Reaching more than 5,000 cars in April puts us on track to reach 50,000 cars in a year. So we are very happy. The momentum we have seen the last year is keeping on. We are very satisfied throughout the models. The demand we are seeing for our iconic 911 is fantastic, especially on the top models. Cayenne -- we had a fantastic transition from the last generation, which explains why we came down a little bit with our numbers compared with last year. We're still at the ramp-up. We just received our V-6 and diesel engines a few weeks ago, so the Cayenne is very hot at the moment. We're still trying to reduce lead time for the Macan.
Can you say what added Macan volume you expect?
No. The demand we see at the moment, I would expect on a long term. On a mid- to long-term basis, we could have a one-to-one ratio between the Cayenne and Macan. We are not positioned with the Macan in a way that we are covering the whole segment. We have the Macan Turbo and Macan S positioned at the high end of the segment. And there is continuing demand for them. So it's hot.
Is the 17 percent sales gain through April sustainable for an entire year?
If we reach 50,000, then we have another [year of] growth, which could be double-digit growth. It's growth based on a very heavily sustainable model. Our incentives are the lowest in the market. The residual values of our cars are the best. [That creates] value-oriented growth, which is also enabling our dealers and our network to be highly profitable. This is important because we are requesting high investments from our dealers.
Since we announced to our dealers our Strategy 2018, we have had more than $200 million invested by our dealer network. We have 58 [dealership construction or renovation] projects currently running.
What are the implications of China passing the U.S. as Porsche's top sales market?
China will continue to grow at a higher pace than the United States, and therefore [we] logically expect China to take over the first position with regards to volume. At the end of the day, that's not that important. The importance is also to make sure we have a very strong mix within our product line. I'm very proud to say we are not only relying on our four-door cars, but our two-door sports cars are very strong. Whatever happens in China, we will remain the first market for the two-door sports cars.
Could China pass the U.S. as Porsche's largest market in 2015?
It could. That's not the case yet. It's a head-to-head race.
Will Porsche dealers' profitability continue to go up or hold steady?
In some cases, they will be impacted by the strong investments they have done. Porsche has been extremely intense and active in product development. We have been the first car manufacturer to launch three hybrid cars in our model lines. We have been launching an average of three to four models or derivatives per year. And of course you require a dealer network which is prepared for that.
The throughput average for Porsche is roughly 250 units per year. We have shifted from having, five to six years ago, less than 100 cars to where we have dealers who are presenting more than 300 cars. This is important to mention because we want to give them the possibility to invest not only in the showroom; we want them to invest in people, [and] we want them to invest in technologies so that the experience of our customers is reaching expectations. If I look back on what has been done in this network, it is absolutely outstanding.
Are you committed to keeping the dealer count around 190?
The center of gravity of the U.S. population has clearly shifted to the South. Some opportunities have opened in the South where we have decided to create an open point, for example in Florida, the [coming] Penske store; in California, in Orange County, which was assigned to AutoNation; in Phoenix. We have some ideas, which are not confirmed yet, of some additional open points, mainly in the South but potentially also in some metros in the North. Chicago could be an opportunity.
How many additional points could you have?
The opportunities in terms of open points can be counted on less than two hands.
Even if we might slightly increase the number of dealerships, we might at the same time continue to consolidate the number of investors. We have roughly 140 investors today, and it's not our intention to continue to increase it.
When you identify an open point, how do you deal with the competition for it?
We handle this in a very open way. We decide whether to allocate this to a specific partner or go through an open competition, and we do it all in a very transparent way.
Are the values and blue-sky multiples you're seeing for Porsche dealerships increasing?
When different studies come out, you can see Porsche at the highest level when it comes to multiples today. It depends on how you calculate multiples, but different studies put us in the neighborhood of seven to eight [times pretax earnings]. I've clearly experienced myself buy-sells which were clearly north of this, clearly north of 10.
Do you expect to have plug-in hybrids for every nameplate in your lineup?
It's too early to say. We have to see how the demand evolves. We are very positive with what we are seeing from the Cayenne and the Panamera. We have one of the strongest [mixes] of plug-ins in the industry. It's early to say how quickly and [with] which models we could extend this technology. But there is no taboo here. We are looking at all solutions provided that this technology complies with our values. It has performance [as] we have demonstrated, especially with the 918 Spyder and the other cars.