Why Porsche sales boss von Platen is feeling optimistic

While Porsche's global sales took a hard hit in March and April because of the coronavirus outbreak, the Volkswagen Group subsidiary is now seeing a "very strong" recovery. "That gives me cause for optimism," Porsche sales boss Detlev von Platen said. Despite the positive indicators, von Platen said the pandemic has been a game changer for the company. He explained why in an interview with Automotive News Europe Associate Publisher & Editor Luca Ciferri and Correspondent Christiaan Hetzner.

How has the pandemic affected Porsche?
The actual consequences are not yet foreseeable -- this applies to Porsche, for the economy and society. At the same time, we also see the corona crisis as an opportunity, with game-changing characteristics. There are initial signs that individual mobility will gain additional relevance. We often hear that people want to drive their own vehicles rather than use mass mobility. Moreover, the virus will also be a huge accelerator in terms of the digitalization of media. The world will be different one year from now.

What does that entail?
We shifted to more online media and marketing initiatives that customers could experience at home, offering stories about Le Mans and developing interactive games for kids as two examples. The way we interact has changed and was perceived in a positive way. This will have long lasting effects. In the future, our team will make decisions where we need to be physically able  to engage with the customer, and where we can be virtual.

Why did you decide to work in your office at Porsche headquarters throughout much of the lockdown?
While I did work a bit from home, I was here about 80 percent of the time. I felt it was important to send the signal that people could find me easily if they needed anything.

How much vehicle production did you lose during the shutdown?
I can’t give you specific numbers because it’s not the same for all the models. We are trying to catch up as much as possible. We have continuously ramped up production. And, in less than four weeks, we have reached regular capacity utilization.

Are you making a larger number of zero- and low-emissions vehicles such as the full-electric Taycan available in Europe at the expense of other markets to avoid being a burden on parent Volkswagen Group’s CO2 targets for 2020?
European fleet emissions are something we take very serious, but if we already have a situation where Taycan supply cannot cope with the order backlog, our first priority is to the customer.

How has demand developed?
We saw a clear hit to the configurations on our web sites in March and part of April, but we are seeing a very strong recovery, not only in Internet traffic but also at our dealership as they re-open. That gives me cause for optimism.

Could you elaborate?
We are seeing demand return, especially in China, where May was a great month for Porsche in terms of deliveries. Global volumes are still lower. However, the increase both in terms of deliveries and order intake that in May amounted to a 35 percent rise on the level seen in March.

Do you have a sales target for this year?
We were very bullish at the start of this year because of our fresh product range, which includes many 911 derivatives and the full-electric Taycan launched in 2019. Although we are seeing signs of recovery in China and Europe, we are still assessing the situation month by month. Most important for us is balancing supply and demand.

Porsche has a higher build-to-order ratio than most automaker, but key markets such as the U.S. are still predominantly build-to-stock. How are your inventories?
At present we don’t have too many cars on lots. We might even have too few in some cases.

German car retailers have warned there could be a wave of insolvencies in that sector because of the crisis. Will this also affect Porsche dealers?
In cases like these timing is essential. Therefore, we reacted very quickly to first and foremost help guarantee the safety and health of our dealers and their staffs. We simultaneously took steps to sustain their businesses by helping them conserve their liquidity and engage their customers.

You don’t expect any of your dealerships to fail?
No.

Porsche had been planning to roll out the first major redesign in your stores in 20 years under the “Destination Porsche” format. Are you now relaxing these mandatory corporate identity investments at your retailers?
From the outset we have been pragmatic, letting them know that they could postpone invests after the peak of the pandemic. Those that had already started, however, chose not to postpone.

What did Porsche do while its assembly plants were shut for six weeks?
We helped our home states of Baden-Wuerttemberg and Saxony acquire personal protective equipment for hospital staff using our supply network. This provided a number of ideas that we disseminated across all our dealers, so they could in turn provide food or mobility to their communities during this time of need.

Taycan volumes seem disappointing with roughly 1,400 sold in the first quarter. Are you worried?
Because of our order books, I am not worried at all. Furthermore, the factory [in Zuffenhausen, near Stuttgart] was closed for six weeks, meaning global demand is now clearly outpacing supply and leading to long wait times, especially in the U.S. Since we restarted the factory, we have not only reached the daily output level that we had planned before the crisis, we are still ramping up Taycan production.

Porsche collected 30,000 deposits for the Taycan before you started selling the car. Half of those deposits were converted into orders. What happened to the other 15,000? Did these customers cancel because of the six-figure price?
Intentionally, we employed a top-down strategy with the Turbo and Turbo S. Our dropout rate was minimal. This suggests the other depositors are waiting for lower priced versions. I cannot say, however, when these will launch globally.

How many Taycan buyers are already Porsche customers? Are they swapping their current Porsche for the Taycan or keeping both?
Roughly half are customers who have never owned a Porsche. Many of them are young. The other half already have a Porsche in the garage, and most are adding the Taycan rather than making a trade-in for one. This indicates that our new EV has gained acceptance among our traditional clientele.

Could you foresee bringing back diesel powertrains if they are made cleaner and more efficient than gasoline?
We are investing roughly 15 billion euros over the next five years into electromobility, digitalization and sustainable production. For a small company such as Porsche, it’s clear we need to prioritize and focus efforts on our core strengths. Consequently, we won’t reconsider this decision.

How many customers left Porsche when you discontinued sales of diesel models?
We might have lost some in markets such as Spain or Italy, but overall we were able to more than offset those losses. Since our exit from diesel, sales have continued to grow thanks to models such as the the plug-in hybrid versions of the Panamera and Cayenne.

Porsche will soon open its eighth experience center, which will be in Italy. Have these centers provided a return on your investment?
Using two of the centers that I know particularly well, which are Atlanta and Los Angeles, we were able to attract more than 440,000 people since we opened them. Those two are absolutely breaking even in terms of cost and revenue.

What benefit do you gain from your Porsche Studios?
They are meant to welcome and provide great experiences for people and spark interest in the brand. We must ensure Porsche remains relevant to the younger demographics. To create relevance you need proximity. Dealerships should remain the final destination.

How much of a role will online sales play in the future?
By 2025, we might see 25 percent of our customers using digital channels either to start, continue or complete the transaction online. We want dealers to spend as little time as possible filling out paperwork. That way they can concentrate on providing training, service and an emotional experience when the car is finally delivered to the customer.

Your U.S. subscription model Porsche Drive Subscription (formerly Porsche Passport) allows users to switch between various models for a monthly fee. Will we see this in Europe?
This pilot has offered the brand access to entirely new customers that I don’t think we would have gained without it. We are looking at this for Europe as well, because we believe there is a market. Porsche Drive will be the umbrella term for new mobility services such as these subscription models.

Can Porsche credibly offer a full-electric 911 given its identity is so closely connected to its unique rear-mounted, flat-six engine configuration?
Let’s cross that bridge when we come to it. The 911 is an icon and the center of gravity for the brand. We will keep this alive as long as we can, because we will be able to meet the fleet CO2 targets on our own. This is one reason why the Taycan is so important. It is the first real sports car in the electric vehicle segment and it helps maintain the viability of the 911.

Sustainability is a word people don’t associate with Porsche, but it is now a strategic pillar of your midterm strategy. Do you have to push your customers in this direction or are they the ones pushing you?
Both. The Porsche brand is still the first motivation for someone to buy a 911 or a Cayenne. To ensure that Porsche remains desirable in the future, we have started to look more deeply into the idea of purpose. Younger consumers want to know what contribution you make to society. If we don’t have a proper answer, we risk losing relevance with this key demographic.