Porsche can continue to increase its sales in the U.S., but the key to the brand's future health will be knowing when the growth is too much.
The luxury manufacturer sold 54,280 vehicles in the U.S. last year, up 4.9 percent. In 2015, Porsche hit its long-term goal to sell 50,000 vehicles in the U.S. -- three years before its self-imposed 2018 deadline.
Todd Blue, member of the Porsche Dealer Board of Regents, looks for a similar increase in 2017, with sales ending up in the 57,000-59,000 range. He strongly discourages Porsche's caretakers from pushing harder to reach 60,000 vehicles sold in the U.S.
"You could produce as many of an undescribed model as you want and blow through that 60,000, but that would be a mistake," said Blue, CEO of IndiGO Auto Group, which has three Porsche stores, in St. Louis, Houston and Rancho Mirage, Calif. "My feeling is as long as we're below 60,000, that's healthy."
Dealers expect big gains in 2017 in sales of the Panamera sedan as a redesigned model goes on sale early in the year. Sales of the flagship 911 sports car also are expected to rise -- and could increase even beyond the company's planning volume if Porsche Cars North America can persuade parent Porsche AG to allocate additional 911 production to the U.S. market.
Even though sales are poised to grow again, the focus of the automaker and its dealers in 2017 needs to be continuing to honor Porsche's brand heritage and polishing the customer experience, said Blue, 47. He spoke with Staff Reporter Amy Wilson.
Q: How was 2016 for Porsche dealers?
A: A to an A minus. Volumes are very healthy. The complete business is better than ever. Porsche has become a well-rounded, full-luxury company in a mature state now versus trying to introduce itself as a four-door and SUV company. It's fully accepted in the marketplace, and it's game on.
The only reason I'd put the minus on there is because of the maturity of some of the products, i.e., the aging Panamera, which is [being replaced early this year]. Anytime luxury companies have the end of the life cycle of some of their best and most important products, it's not perfect.
Porsche's U.S. sales have grown for eight straight years. Can Porsche do it again in 2017?
Yes. One, what really gives us the opportunity is the new fresh Panamera in strong numbers. The variants that will come from that car are exciting opportunities, from the executive model that will be much more thought out to a Sport Turismo model. Two, we get new GT cars [for 911] coming midyear. We cannot get enough 911s. We're now nearly a year into the new car and the demand is stronger than when it first came out.
What kind of percentage gain or total volume do you expect Porsche to achieve in 2017?
Single digits as far as percentage increase. One thing Porsche does, which I am grateful for as a dealer, is they're not trying to win sales championships for the simple fact of winning championships. They want to build the best, most desired and be the most aspirational brand. They really match supply to one car under [the demand]. We need to build a few more 911s because there is incredible demand for the car. The planned volume for Panamera is perfect.
Will Panamera set a sales record this year?
This car is groundbreakingly beautiful. We will set a record in 2017 with Panamera sales, probably between 8,500 and 9,000.
You mentioned the coming Panamera variants, including the Sport Turismo, which probably won't arrive in the U.S. until 2018. Were you surprised that Porsche greenlighted the wagon/shooting-brake body style for the U.S. market?
As a car guy, I couldn't be more excited about that vehicle coming. That style has in the past been incredibly well-received in Europe. Some people out there are scared of that kind of product [for the U.S.], but what I'm so excited about is there's nothing like that in the marketplace. In an era when consumers are looking for uniqueness, authenticity and utility, I believe the Sport Turismo will be the car. I don't think every person in the world wants to drive an SUV, and I don't think every person in the world wants to drive a sedan. People want sportiness and performance. They need and want utility. But they also want something unique and authentic. I feel like that's the bill. I personally would be the demographic for the Sport Turismo. I will drive one. And I can't wait.
Will 911 sales go up?
We do not have confirmation from Stuttgart that we can get more 911s. But we desperately need more 911s. [Planning volume for 2017] is for a little bit more than 2016, but it needs to be maybe 10 percent more than the current proposed. We have an inability to fulfill demand for GT cars, Turbos and Targas, and that trickles down into demand for 911 overall. Literally, I can't even keep regular base 911s in stock. 911s are either presold or sit around for a week, and they're gone.
What has been the market's response to the re-engineered and renamed 718 Boxsters and 718 Caymans with their new four-cylinder engines?
The true enthusiasts love the cars. That car is planned to be somewhere between niche and volume. That's a healthy place for it. The improvement that could be made on Boxster and Cayman are awareness with consumers that have never tried the brand, that have never put it on the shopping list. We could probably do a better job with somebody like -- this will sound crazy because it's so volume -- but if we could work with Corvette customers and get them to try this product, it would open their eyes to Porsche and the performance-to-weight ratio, and the balance of the car. What's great about the midengine cars is the enthusiast can still own a Porsche. If we become unattainable, that's a mistake.
Dealers have long asked Porsche to put more marketing behind those cars. Has the brand stepped it up at all?
They have. It's my understanding that Porsche will step up television in general this year.
Have you gotten pushback from customers for moving to the four-cylinder?
It goes back to the whole new world we're living in and all the new powertrains from electric to hybrid to four-cylinder turbocharged. All these products are astounding customers and opening their eyes. The key to that car is getting customers in it and driving it. We don't have a problem after they're in the car.
By adding the four-cylinder base model, the Macan became volume leader for the brand in 2016. Will it stay there?
Yes, no question. The regular Macan, the non-S, is doing exactly as intended and getting completely new people to the brand. Our showrooms are filled with people who have never had Porsche on their shopping list because they couldn't. It's fun. It's a new challenge, I'll be honest. It is a more competitive segment.
At the top, this year we get this Macan Turbo Performance Edition, and I do have a little bone to pick. This is probably the only thing I'll say negative today, and it's a high-class problem. The car is incredible. The problem is we need some better badging. American consumers need badging. They want to be different. If they spend more and have an upgraded vehicle, they want it to say so on the badging. It's pretty [visually] indistinguishable.
Will Macan sales increase in 2017?
It will be up, but that's because of four-cylinder production.
What are the challenges for Porsche dealers in 2017?
That luxury has become a playing field that everybody wants to be in. Is there going to be overproduction of vehicles in this ongoing arms race, or will manufacturers wise up and say, "We don't have to be No. 1?" Porsche's only foreseen risk in 2017 is the overproduction of luxury cars by everybody else.
How is profitability for Porsche dealers?
Good to very good. It's not on a per-vehicle basis what it was a couple of years ago, but that is a conscious and understandable decision that [is part of] a more mature and balanced company. We have a unique mix of units in operation now, and our fixed-ops departments need to continue to be a more important component than they have ever been in the past to the success of our stores. Most Porsche dealers in previous years had a stronger reliance on front-end new-car gross for their profitability than other brands. That's not a sustainable business model over the long haul. We have to be able to make our money in a more balanced way as dealers.
What are the Board of Regents' goals for 2017?
At the top of the list is this continued effort to drive loyalty, and customer satisfaction is directly correlated. We continue to believe the metrics by which customer service is measured need to be looked at. Most affluent consumers don't want to be bothered with long surveys. So new ways to measure customer satisfaction is at the top of the list, taking things that are three pages and 50-plus questions and going to -- I'm not kidding -- under five questions.
Porsche on its internal surveys are fantastic, and they have continued to adapt. They have listened to us. We should demand a more modern survey process from our third-party surveyors if we're going to do business with them.
Klaus Zelmer just finished his first full year leading Porsche Cars North America. What's the verdict?
Detlev [von Platen] took Porsche to a whole new level. His brand building, his connection to dealers, the excitement he created for the brand was incredible. So Klaus came in with huge shoes to fill, and I will say he's absolutely exceeded people's expectations. [With Klaus, dealers like] his willingness to listen and his ability to adapt and change quickly when he gets feedback.
There are new training initiatives under way, and dealers have asked for balance in the requirements. How is the program taking shape?
More training is better. It's key that we are respectful of dealers' time. One of the biggest complications in the industry is pulling dealers and managers and people out of the store. They are improving the amount of training where they come to us at the dealership, which is great. We don't want to unnecessarily and overly burden these businesses beyond profitability. In order to service your customers and provide a luxury experience with properly trained people, it costs more money. We can do all that stuff as long as we don't give away all the margin in the business.
Do the two new Porsche Experience Centers in the U.S. play a role?
That is a huge thing to reduce the amount of international travel. It's a huge benefit. It will actually help us as dealers with team member loyalty and retention because they know they're part of a very special brand. It's Disneyland for adults.
Is there any product missing in the lineup?
Not really. The balance is good. I'm excited about the Mission E that is coming. I feel like it's a Tesla killer, not a Tesla fighter. With the new platforms, you can also have a bunch of different variants on that kind of product.
In 2016, the Board of Regents had a goal to get more balance around loaner vehicles. How did that go?
It's been a big conversation and heavily worked-on topic. There is a direct correlation between customer satisfaction, loyalty and loaner cars -- not any loaner cars but loaner cars that are your brand. Porsche has put into place something that's been expensive and not easy for dealers, but we're on board. We have everything in place, and we've all invested in a software system to manage our loaner cars, and it's progressing. It's a new day and a redefinition of luxury. We can't eliminate dealership profitability and provide a luxury experience. As long as we all remember that, that's the key.