For Porsche Cars North America and its dealers, 2020 was full of change.
It was the first full year of sales of the Taycan, Porsche's initial electric vehicle, which totaled 4,414 vehicles for the year.
Kjell Gruner, Porsche's chief marketing officer, took over as CEO of Porsche Cars North America in November after Klaus Zellmer was elevated to chief sales officer at Volkswagen.
Despite the COVID-19 pandemic, the German automaker's U.S. sales were down only 6.9 percent to 57,294 vehicles, making it the second-highest sales total in the automaker's history.
The theme of electrification will continue in 2021 with additional Taycan variants joining the portfolio.
Mike Sullivan, owner of the LAcarGuy dealership group in Southern California — which includes Porsche South Bay in Hawthorne — and chairman of the Porsche Dealer Board of Regents, said Taycan sales should double this year.
Sullivan, 67, spoke with Staff Reporter Jack Walsworth. Here are edited excerpts.
Q: How was 2020 for you and for Porsche dealers in the U.S. overall?
A: Just for me, personally, being in Los Angeles, it was probably more amplified than most cities in the country with COVID and riots. We were certainly in the heart of it. For the Porsche dealers across the country, it hit all of us, like it did the industry. Some of us got down to actually closing, like me. In certain cities, obviously, it was more impacting. In general, the disruption was evenly spread.
For us to have the year we had, it was a huge surprise. If you had told us in March, April, May, where we would end up, I would have just said you're foolhardy. It was a big year. It was the second biggest year for Porsche ever and the most profitable year for Porsche dealers ever.
Is there anything that Porsche dealers point to as a reason for that success?
It was interesting. Demand stayed very good. Supply got weird, for obvious reasons, with plants starting and stopping, people working from home and just the insecurity of the flow of our business. As cars became short, that certainly helped margins. We obviously would prefer to be one short than the one long.
At the same time, as horrible as it was for someone like me to close stores, we never closed completely. Sales were closed for three weeks and service got cut back to about 25 percent. We were operating but at a real weird level. We were able to de facto cut expenses. You had to. You had to stop advertising and furlough employees. The only upside to all that is we sort of got control of our business and our expenses. Then with Porsche coming back like it did, which was just a huge surprise, that combination really turned out to be OK.
How did the Taycan launch go?
You would never plan to do what we did. We launched the car in tiny, tiny numbers in January and it was to ramp up in March. Things didn't go as planned. We got our butts kicked on that one. But it was well received by the people that knew about it and wanted it. The Porsche people that had cars on order were excited about it and still took their deliveries. After that, nothing went right on the launch. It couldn't be a more horrible time to launch, arguably, one of the most important cars in Porsche's history.
The third quarter was very good. The fourth quarter was, by design, pulled back ever so slightly, but it was very good. The second half of the year was on where we should have been and they were able to pull back a little bit for fourth quarter so that we don't run '20s into '21. We're always very careful with that. I think the numbers will double [this] year, or close to it. The car is being really well received. I would say it would be hard to be more pleased with the launch of a new electric car in 2020 and have it turned out the way it did.
What does Taycan demand look like in 2021?
Porsche is probably the only manufacturer that I have that really plans their volumes with the dealers in mind and with the market in mind. They're too small to miss a number. They can't have an oversupply of cars in January from the previous year and have to incentivize them. They don't have that budget and it would ruin the franchise. Porsche, by design, is very careful to work with the dealers. We, the board of regents, try to represent the dealers in the situation. They're very careful to talk numbers and plan with us. We go over and talk about, "Is that too high? Is that too low?" on every model, every build.
Porsche, in round numbers, is going to double next year on Taycan. We're very much in line with that. We think we're spot on.
Have there been any updates from Porsche on the Taycan Cross Turismo? Last we reported, it was due in the second quarter of 2021.
Yes, it's going to come sometime in there, it looks like. But that'll be a small derivative. It'll be an interesting, but small, piece of the Taycan [business] in general.
How are Porsche dealers feeling about inventory? Will that be a challenge in 2021?
If anything, it'll be a little bit low. We'll have, as you'd expect, a couple of hangovers in every line. But in general, we're going in in very good shape.
We were real short of cars from Thanksgiving on. We got cars at the very end of the year. We had a bubble and a huge spike in sales in the last 10 days. That was a great way to end the year.
But we'll go into '21 where the dealers are fighting to earn cars, which is exactly what you want. We'd all want to be part of a pull system, not a push system. That's sort of the magic of Porsche.
For 2021, what's the product Porsche dealers are excited about getting?
The franchise always starts and stops with 911.
We have all of the real special cars, the turbos and targas, just now getting here. And then the ultimate [variant] with all the GT cars will come in '21. That will pace Porsche for the year. After that, there'll be more Taycan variants as we double [sales]. Clearly, we're going to have to have more than just Turbo and Turbo S.
The bulk of our business, ironically, is four-doors and SUVs. It's still interesting to watch. But the Cayenne and Macan are just doing great.
Again, we never have enough cars. I have to hustle to get cars to put into my loaner service. All of those things we're always short on and working to get more of.
What's the expectation for the electric Macan?
Where the whole group is going — Volkswagen, Porsche, Audi — if you think of what they're doing with electrification, it actually makes total sense. You're probably going to go into your 911 at the end, if ever, so that's sort of one side of the equation. So where are you going to go? You're going to go right at the heart of the market with a medium-sized SUV, the car that most people want. If you had to build one car for America, that's what you'd build. So to make it all electric would seem to me to be really the most logical, really the only, choice.
While it's a big change, it won't happen for a little bit longer while we continue to roll out even-better charging stations, even-quicker [charging] times and more and more true infrastructure of charging stations, where they become so common and prevalent that it's just not an issue. Our timing is pretty good.
That's pegged for a 2022 arrival. Is that still about what you're hearing?
That's still what they're talking about. Anytime things are a year away, or a year and a half away, we always take that sort of as a soft number. I always assume that if you say 18 months from now, that might really mean 15 or 24 months.
They're putting this off far enough away that it's got some flexibility. I think that the important part is that we started it and we wanted to be at the front of the market and make the change.
When you take a bestselling car, you want to now time that a little bit and make sure that [electrification is] more normal. You want to time that one. You sort of break down the door with that Taycan Turbo S, explode on the market and go, "Hey, look at me." And now the Macan needs to come in with a different personality.
Does your dealership take part in the Porsche Drive subscription program?
Yes. We are just getting cars now. Los Angeles was the third rollout of cities. It started in Atlanta right near [Porsche Cars North America headquarters] and then next went to a number of smaller, more geographically easy-to-control cities like Las Vegas. Now it's coming into Los Angeles. There'll be two of us [dealers] that share Los Angeles and we're just receiving our cars now. We're pleased. We think it's going to be yet another addition. For the dealers that want to participate, it probably doesn't make you a lot of money, but it's another step toward being a progressive dealer and seeing how deep that market is.
Is there an expectation that most Porsche dealers will take part in the program eventually?
I think they're really watching it and rolling it out very carefully. Like I said, it was Atlanta and then four cities like Las Vegas and Seattle.
L.A. is yet a new challenge. I really think Porsche is watching it like we are. Everybody predicts this as being a segment, but no one's done it. No one has been successful. We're being very careful and I think they're rolling it out with their eyes wide open. I don't want to say it's a test, but it's definitely being rolled out carefully. I don't think it's in their wildest imagination [that] they see everybody doing it. I guess that would be the ultimate goal, but I don't think that's their expectation.
Toward the end of last year Porsche Cars North America got a new CEO after Klaus Zellmer was elevated to chief sales officer at Volkswagen. How has the transition been to CEO Kjell Gruner?
If I can digress on that question, it's been one of the real changes in Porsche. The Germans used to treat us as a bit of an outpost. Everything happened, was designed and built for Germany. Over the years, the U.S. has become a genuinely important part of what Porsche is. As has China. So if you think of how much their world has changed, it's really interesting.
If you look at the president before Klaus, it was Detlev von Platen. He went right from here to head of sales and marketing for the world. Well, that was a pretty great place for an ex-president for us. What a well-placed position for us to have a friend that goes from here to there. Now Klaus Zellmer is in a much bigger capacity with Volkswagen. He takes on that sales and marketing for the world for Volkswagen. It's a huge job. And now Kjell comes from the board. He was in charge of marketing for the world.
We all knew him from all of our dealer launches and all of our meetings in Germany and Spain. That was all part of what he did. A lot of us already have a nice working relationship with Kjell. What's important to me is to see that kind of interplay where they take a board member into the U.S., or they take a president of Porsche [Cars North America]. The last two of them have gone up to major jobs with Porsche and Volkswagen. That's a big deal. The dealers that have been around with European franchises will really understand that. That's a big deal. That's not the way it was when I was growing up, to say the least.
What's missing in the product lineup?
We don't need to go down market any lower. We have enough entry-level cars and SUVs. I think it's almost time to start talking about another supercar again, the 918 replacement. It's about time to start visiting about that. I think that there's a Ferrari fighter in the system. That would make sense. Very, very limited numbers. Maybe not as limited as the 918 was, but there's a Ferrari fighter in there.
But otherwise, their growth will be arithmetic, logical and practical. It's not like they're missing a segment, in my opinion. They've got to be careful with the entry-level cars, like the Boxster and Cayman, and make sure that we're still price-competitive in that market. Right now, they're pretty tight. We are who we are. We're not trying to be all things. I think that would be a terrible mistake to try to go too broad. There's a consistency in our buyer, our marketing, in their expectations and we, those 200 dealers, can meet that if we grow arithmetically. By design, I don't think there's a segment missing.
