After nine straight years of record U.S. sales, 2018 could present more of a balancing act for Porsche dealers.
Dealers are generally happy and looking forward to another good year. But volume for 2018 will be largely backloaded to the second half of the year, said Todd Blue, member of the Porsche Dealer Board of Regents.
That means dealers need to "pace ourselves correctly in anticipation of the volume we need to support these beautiful facilities we've all built," said Blue, CEO of IndiGO Auto Group, which has three Porsche stores, in St. Louis, Houston and Rancho Mirage, Calif.
That backloading will be felt mainly in the 911 and Cayenne lines, said Blue, 49. Dealers are getting updated GT variants of the 911 during the first part of the year, but those high-end cars come in lower volumes. Higher overall 911 allocations are expected in the second half. Porsche dealers won't get the redesigned Cayenne crossover until July or so, and they expect to run out of the existing model before then.
Key for dealers will be knowing y when vehicles will arrive so they can plan better, Blue said. So far in 2018, Porsche sales are up 12 percent through February. In 2017, Porsche sales rose 2.1 percent to 55,420 vehicles. Blue spoke with Staff Reporter Amy Wilson.
Q: How was 2017 for Porsche dealers?
A: Fantastic. The connectivity to the dealer body is outstanding.
What major issues do Porsche dealers face?
In 2018, we have a transition year where [the redesigned] Cayenne doesn't come till the third quarter. Pacing ourselves, with anticipation of what will be our best-selling vehicle, is a balancing act for Porsche dealers, but we've got some good planning.
Also our 911 volume is a little backloaded toward the end of the year. But things are in good balance with the product mix. We've got some really wonderful and new and fresh products at the beginning of the year like the GT 911s — the GT2 RS, the GT3s. We're getting that now, which is very helpful.
What does the board of regents hope to accomplish in 2018?
Even though we're talking about 2019, 2020 for Mission E, we are very focused on everything we're doing on the electrification of Porsche. The time is now to be planning, thinking, strategizing. We are making more than just baby steps toward electrification, which is going to be a revolutionary thing for this company and the industry.
Porsche has committed to a major push on electric. Is it doing enough to get dealers ready to sell them?
There are meetings scheduled, in a healthy staggered way, between now and the arrival of that vehicle to get dealers ready. Nothing will be a surprise to any of the dealers. Porsche is on this. We'll be ready, and they are getting us ready through a tremendous amount of communications.
What specific changes will need to happen at the dealership?
Whether it's the number of amps required for the fast-charge system to charge these vehicles from a zero battery to 80 percent in 15 minutes, that's going to be a huge point of differentiation, especially in the beginning, for Porsche. All the ways to handle the batteries, both the physical way as well as the maintenance, is all being discussed.
How much will dealers have to invest to put in fast-charging infrastructure?
We are not aware of the cost yet. We'll know more this year. It's fair to say Porsche will probably have a road map for dealers by no later than first quarter of '19.
How is dealership profitability for the Porsche network?
Excellent. Porsche continues to have the perfect equilibrium of demand versus supply. The secret for Porsche is not too many variations or models. Some of the other luxury marques have made a huge mistake to have 100 variations of cars. You don't need that many variations. The marketplace is astute.
Porsche has decided to build what consumers want and not try to win volume championships. As long as we continue to have that healthy equilibrium, this company will continue to be successful in good and bad economies.
Are dealers asking for any steps in 2018 to help with store profitability?
As this market continues to mature, all brands are going to need help. Interest rate risk is the biggest risk to dealership profitability in 2018, both wholesale and retail. With dealer inventories at close to all-time highs in terms of dollars, not days supply, and with the reliance consumers have had on basically almost 0 or 2 or 3 percent interest rate, discipline with production is critical. We do not need oversupply from any brand, including Porsche, at these mature levels.
Money spent on the brand is paramount. It's not just about customer service. [That] is a prerequisite no matter what. These companies have got to protect these beautiful brands they have worked for decades to build. Porsche does a beautiful job projecting the brand, both with not making too many and investing in the brand and the brand culture. This year, as an example, Porsche will participate in racing, product launches, concours and car shows. But then they also have Rennsport [Reunion] in September this year, and Rennsport is huge. That is a multimillion investment by Porsche to celebrate the brand with customers, hand in hand.
This is thousands of people telling their friends, sharing a passion for the brand and [putting] everybody that has touched this brand for 70 years together for a week engulfing themselves in Porsche. For Porsche to invest that kind of money is so wise. The dividends are immeasurable. One of Porsche's successes is they don't overcomplicate luxury because they focus on passion. You won't need to have 8,000 measurement tools and matrixes and vendors and all this stuff. Just go celebrate the brand, and the customers will come.
Has progress been made on restoring manual transmission models, which dealers thought was necessary?
I'm absolutely thrilled that Porsche listened to us when we begged for the continuation of and the increase of manual models. They're offered at different levels — an entry-level 911, Cayman and Boxster, but then they're also offered with higher-level vehicles like the 911 R and the GTS models. While they're still not a huge total percentage of sales, they are the most in demand and exciting vehicles on the showroom floor.
Do dealers want a plug-in 911?
I don't think it's mandatory. We'd be open to it, but I'd rather have, if given a choice, a small crossover plug-in.
Along those lines, do dealers want a Macan EV?
It would be great. I don't think it necessarily has to be a Macan. It could be its own crossover EV thing.
Do dealers want a coupe body style for Porsche's crossovers?
I'm OK with a slung-back roof four door. It would be pretty cool. I'm not in favor of a two-door Cayenne.
Being consistent with earlier, I don't want to get too many variants and be like everybody else. We [need to be] bringing to market stuff that consumers are asking for.
Why did Porsche wait an extra model year for the redesigned Cayenne to come to the U.S. when it's out in other markets already?
I don't really know. I would only guess Porsche is so committed to quality, they want to make sure it's absolutely perfect quality in the U.S.
What are the expectations for the redesigned Cayenne?
The technology, performance and fuel economy are great. The design is prototypical Porsche evolutionary. It's not a huge change on the outside, which is fine. I don't think you have to revolutionize exterior design every single time.
Earlier in the conversation, you said the Cayenne could become the biggest-selling model again and pass Macan sales. When do you foresee that?
In 2019, not in 2018. But it's no [guarantee].
After going on sale last year, is there more room for growth for the redesigned Panamera this year?
There's definitely room. The new car is so fantastic. I drive the Sport Turismo. With the offering of the Sport Turismo and a five-seat car now, we make zero apologies or excuses to Mercedes customers who may be considering an S class.
Is the five-seat sedan body style already at dealerships?
It's out for the Sport Turismo, and it's coming in the regular car soon.
Porsche and its dealers have put a lot of emphasis on improving the customer experience. How is the Excite program going?
[Porsche Cars North America CEO] Klaus Zellmer is a genuine Porsche fanatic. Translating his fanaticism to the brand and connecting it with the Disney Excite program is only going to benefit Porsche.
Dealers had been concerned about costs associated with an early idea to send most dealership employees to Porsche Experience Centers to do the training. Now I'm hearing it's likely that only key employees will travel for off-site training, with the bulk of dealership employees trained in the store. Is that official?
That's my understanding but I don't have confirmation yet.
How is the Porsche Passport subscription pilot going from the perspective of the dealers?
I'm not for it. I think retailers need to be retailers, and I don't think manufacturers should have a direct connection to the consumer in that way. They need to allow the dealers to handle that customer. I feel strongly about it. I'm against it. I'm against eliminating the retailers.
Is that a fairly universally held position among the dealers?
For sure.
I'm not against what the Passport program does, I'm against the manufacturer going direct to the customer. It's not appropriate, especially with the investments we've made in facilities we have, especially with franchise law.
Is the dealer board talking to Porsche about a way to more directly involve dealers in a subscription model if it chooses to expand the program?
Yeah. We're talking all the time.
Any traction on it with them?
Not yet.
Zellmer said in January that Porsche expects online transactions to become 30 percent of all sales. Is Porsche involving dealers in new ways to do online sales?
We do online sales everyday. It's all how you want to position it, right? I feel like we have built these incredible facilities and created an incredible experience. We need to walk very carefully as a brand. We have to be very careful not to pull the passion out of this brand, and part of the passion is the physical environment we've created here.
We don't need to Amazon the Porsche business. There's always going to be room for a component of something. I don't know the amounts. But we need to walk very carefully.
I'm not scared of it. I'm not against it. I'm not against change. But I also know what we have right now is incredibly successful, and Porsche does not need to be in the herd mentality. Porsche needs to remember that the passion about this brand is one of the top three reasons this brand is so successful. Online can pull some passion out of things. We've got to be careful.
