Porsche America Taking the Fast Lane

Porsche keeps setting sales records in the United States, with double-digit percentage growth over four years. The brand’s exclusive image is embraced by prosperous Americans and cherished by executives.
Porsche SE can't escape the scandal at Volkswagen, of which it owns just over 50 percent.

 

Porsche takes its U.S. competitors seriously. That’s why its executives went on a special tour in the United States last week. Joined by the horse powers of Chevrolet’s Camaro and Corvette and Ford’s pick-up F-150, the best-selling car in America, the German managers hit the road in and around Atlanta. Porsche’s chief executive Matthias Müller officially opened the carmaker’s new U.S. headquarters in Georgia’s capital.

The reason for the special trip: To see with their own eyes and feel with their own feet on the gas pedal what Americans expect from a car. The U.S. market, after all, remains the most important one for the sports carmaker from Stuttgart.

Of 190,000 Porsche’s sold last year, 47,000 were delivered to U.S. customers. The brand, part of the Volkswagen Group, has grown sales by double-digit figures for four years straight.

It is a sharp contrast to sales of the Volkswagen brand, which managed no growth in the North American market last year. Volkswagen cars such as Passat and Jetta are not very popular with customers compared with Ford’s Explorer or Toyota’s Highlander.

Hence we’d rather sell a car less than one too many. Matthias Müller, CEO, Porsche

Volkswagen’s struggles in the United States and disagreements over the right strategy to tackle them was one of the reasons its controlling shareholder, Ferdinand Piëch, resigned as non-executive chairman of the group last month.

Porsche and America, on the other hand, can be seen as a 65-year-old love story. No other place in the world counts more organized fans. The Porsche club of America alone has more than 110,000 members. With record sales last year, there is no shortage of successors either. For this year, 50,000 deliveries are expected, CEO Mr. Müller said when he officially opened the new $100-million office in Atlanta.

It may seem a heavy price tag, but it's nothing extraordinary in light of booming sales. Porsche’s growth is buoyed by the new mid-sized SUV model Macan, which is selling well in the States. In April alone, Porsche sold 1,537 of the model, topped only by the bigger Cayenne SUV, which sold 240 more.

Of course, Porsche remains a niche player. It has a U.S. market share of only 0.4 percent. It shouldn’t become much more than that to protect the car’s image of exclusivity, in Porsche’s view.

After all, this image is an important reason Porsche has succeeded in becoming the most profitable brand of the Volkswagen Group, which also includes Audi, Skoda, Bentley and other brands. Porsche’s operating profit margin was 15.8 percent last year, and even higher the year before.

WTB 2014

“We have not set a figure as a target. Instead, we want to get a sense of how much we can expand the brand,” Mr. Müller said.

He is taking a different course than most in the automobile industry, and this also applies to the setting of prices and the product line. “Hence we’d rather sell a car less than one too many,” the CEO said.

This strategy is not in conflict with that of the Volkswagen Group, Mr. Müller knows for certain. Volkswagen has been growing and is set to become the world’s largest carmaker once it takes over from Toyota, which is still the biggest. “With currently more than 10 million sold cars, it is entirely irrelevant whether Porsche sells 190,000 or 195,000 cars,” Mr. Müller said.

His view is fully consistent with that of the VW chief executive, Martin Winterkorn, Mr. Müller added. “Thank God we have Mr. Winterkorn, who knows exactly how to position the group’s twelve brands.”

At other companies, such elitist thinking has led to conflicts. Last year, the chief executive of Italian sports carmaker Ferrari, Luca die Montezemolo, said he only wanted to build 7,000 cars per year. The statement angered Sergio Marchionne, CEO of Ferrari’s parent company Fiat. Shortly thereafter, Mr. Montezemolo was out of a job.

It was an incident which Porsche’s executive could not understand. “If Mr. Marchionne thinks he can turn Ferrari into a mass market brand I can only say: ‘A very warm welcome’,” Mr. Müller said drily.

 

Video: A review of the Porsche Macan.

 

Christian Schnell is a correspondent with Handelsblatt, writing about the auto industry. Gilbert Kreijger, an editor with Handelsblatt Global Edition in Berlin, contributed to this article. To contact the author: [email protected]