Porsche, fall off the altar

Introduction: Porsche, which used to have to "queue up at a higher price", has seen a rare decline in sales in the Chinese market. Why do Chinese suddenly stop loving Porsche?

On a sunny Saturday, at a Porsche Centre in the west of Beijing, more than a dozen show cars lay quietly in the exhibition hall. There were only two or three people who came to see the car, and the salesperson seemed bored. The huge exhibition hall is so quiet that consumers who look at the car consciously lower their voices...

However, its sales staff is particularly enthusiastic, and the author talked with him for a few words to learn that many models in the exhibition hall can have a discount of about 8.5 percent, and even as long as the procedures are completed, you can drive away directly.

This is a world of difference from the situation when the price increase was used to play with the car, and even the price was increased, and it was necessary to wait for half a year.

However, this is a microcosm of the current situation of Porsche in China.

1) Porsche, which fell to the altar in China

As the Chinese market, which has occupied the top spot in Porsche's global single market sales for eight years, sold a total of 60,700 units in the first three quarters of this year, a decrease of nearly 12% compared with the same period last year, becoming the only market where Porsche's sales declined.

At the same time, the North American market overtook China and temporarily regained Porsche's largest single market in the world.

In the first half of 2023, Porsche's year-on-year growth in China was 7.75%, which means that in the third quarter, it was the main culprit for Porsche's cumulative decline in sales in the Chinese market.

Not surprisingly, Porsche may see its sales decline for two consecutive years, but this is against the backdrop of removing masks and cutting prices in 2023.

However, whether it is the data released by the Passenger Association or the China Association of Automobile Manufacturers, China's auto market has ushered in a new round of growth since July. In particular, after retail sales exceeded the 2 million mark in September, retail sales continued to rise to 2.033 million units in October.

From the sales data of the Chinese market, we can find that Porsche's sales in the third quarter of this year were 16,900 units, a decrease of nearly 40% from 28,100 units in the same period last year.

It is no wonder that Porsche began to "sell cars at a discount", which is almost unimaginable in the past ten years - Porsche, a brand that was once sought after by countless people in China, seems to have fallen off the altar overnight.

As the jewel of the German automobile industry, Porsche, which was once high, is regarded as a treasure by countless car fans. But when the time comes to 2023 AD, Porsche has encountered Waterloo in China.

I am afraid that Mr. Ferdinand Porsche never imagined that the Porsche brand he founded would become popular all over the world after more than 90 years, but it would suddenly not be able to satisfy the appetite of Chinese consumers.

2) In the era of electrification, Chinese consumers do not love Porsche?

With the rapid transformation of China's auto market to electrification, consumers are more receptive to new energy vehicles, and in the context of the continuous influx of new forces and IT companies into the automotive industry, no intelligence and no luxury, which also makes Porsche be left behind again in the field of intelligence after being counterattacked by electric vehicles.

In the past 3~5 years, China's new energy vehicles have sprung up, which is somewhat unexpected for Porsche, the king of the internal combustion engine era.

Regardless of whether it is a traditional car company or a new force in car manufacturing, the new energy products launched by Chinese brands in recent years have achieved leapfrog development in cockpit intelligence, and a series of seemingly "nonsensical" configurations such as "refrigerators, color TVs, and large sofas" have been installed into the car by manufacturers, and even become standard equipment, which is difficult to achieve by current joint ventures or imported brands.

In addition to the above, the huge improvement of the manufacturing process, safety technology application, vehicle power, energy storage and other products of self-owned brand new energy vehicles has been fully affirmed by the market.

Excellent product strength, more luxurious and technological configuration, full of sincerity of the price, nowadays, a considerable number of Chinese consumers in the choice of car, no longer like before, "BBA" on the lips, but will focus more on their own brands.

Unconsciously, they have changed their inherent thinking, no longer blindly worship foreign brands, and begin to start from their own car scenarios, and choose products that are suitable for themselves and their families more cautiously and rationally.

This is why Li Auto's monthly sales can break 40,000 units, or even move towards 50,000 units, while Porsche can only cut prices to survive.

In other words, families who can afford the Ideal L9 and the M9 will not be able to afford a Porsche?

3) The competitiveness of the product has declined, and only the shield badge is still dazzling

Although new energy products such as the pure electric Taycan, plug-in hybrid Panamera and Cayenne have also been launched, Porsche's advantages over high-end new energy vehicles of the same type in China are no longer obvious, and even seem a little different from the products of the same era.

Even if the Porsche 911 remains a work of art, the raw, purely mechanical feeling will always get the driver's adrenaline pumping and addictive.

However, for the sake of profit, even a sporty luxury brand like Porsche has had to compromise with the market and come up with products like the Cayenne, Panamera and even the Macan that use the Audi platform.

Although this type of product once made Porsche a lot of money in China, it is now clearly not competitive.

Compared with the continuous innovation of Chinese brands, Porsche seems to lag behind even in the update and iteration of traditional fuel vehicles, so it seems that it is easy to understand the dismal sales.

What's more, in terms of fast-growing pure electric products, since the name of the Taycan was announced at Porsche's 70th anniversary celebration in 2018, five years have passed, and the Porsche pure electric segment is still only sold by the Taycan.

Even so, the Taycan, as the only pure electric seedling of Porsche, has problems with battery safety.

More than 2,500 Porsche Taycans have been recalled by Porsche China on October 16 due to the increased risk of thermal runaway due to poor sealing of high-voltage batteries. This is undoubtedly a heavy blow to Porsche in China.

The all-electric version of the Macan, originally developed on the PPE platform, was expected to be launched this year, but due to software issues, it was postponed to 2024.

It will be clear in a few months whether it will gain an advantage in the competition with its own high-end products, and how much it will help Porsche boost sales in the Chinese market.

4) The world is still very profitable, and North America regains the "champion"

On October 25, Porsche, which has been IPO for some time, announced its financial results for the third quarter of this year.

"Image from Porsche's 2023 Q3 financial report"

As of the end of September 2023, Porsche has delivered a total of 242,700 vehicles, a year-on-year increase of 9.58%, sales revenue of 30.132 billion euros, a year-on-year increase of 12.64%, and operating profit of 5.501 billion euros (about 42.8 billion yuan), a year-on-year increase of 8.95%.

Such results are absolutely excellent for any car company, but a set of data in this financial report is very interesting.

In the first three quarters, Porsche delivered 24,800 vehicles in Germany, up 19.01% year-on-year, 51,700 units in Europe outside Germany, up 22.6% year-on-year, 64,500 units in North America, up 14.43% year-on-year, and 40,900 units in other countries and regions, up 22.79% year-on-year.

"Image from Porsche's 2023 Q3 financial report"

This also means that the Chinese market is the only "disaster area" for Porsche. So, will sacrificing profits and discounting promotions maintain market share? How much damage will this cause to Porsche's brand? What will happen to Audi, which has already been squeezed by Mercedes-Benz and BMW? What kind of impact will Porsche's dominoes have on the luxury car market? Let's wait and see.

Views of AutosKline：

Since former Porsche CEO Oliver Brummer took over Herbert Diess at the helm of the Volkswagen Group in September last year, the new Volkswagen CEO, who has held key positions at Audi, Volkswagen and Porsche since 1994, has begun to reorganize the Group's brands.

At the beginning of the year, Bloomer announced a work plan within the Volkswagen Group to bring the brands closer together and made targeted changes to the group's management.

"Photo from Volkswagen Group 2023 Semi-Annual Report"

According to the recent data of the Volkswagen Group, as of the end of September this year, the group's operating profit fell by 7% year-on-year, which is up from the year-on-year decline of 13.9% in the first half of the year.

Brummer's plan seems to be moving the Volkswagen Group in a positive direction, but it is clear to all that the influence of the Volkswagen Group's brands in China, including the Porsche brand, is rapidly declining. As an important part of the Volkswagen Group's global strategy, the pace of decline in the Chinese market is astonishing.

The Volkswagen Group under Bloomer is already trying to turn things around through technical partnerships, product mixing, and new joint ventures. In September, a management consulting company owned by Porsche approached the local government in Hefei, Anhui Province, about the development of the autonomous driving industry.

However, in the end, everything has to come back to the product. Porsche's product advantages, built up by performance and handling, are also being challenged by some Chinese brands in the era of electrification.

In the sedan market, there is the just-launched Zeekrypton 001 FR, in the SUV market, BYD looks up to the U8, and even in the supercar market, Haobo SSR comes to challenge.

How many tricks does Porsche have to fight back in the face of the challenge of its own brand in China? Is it the only emotion that makes this stallion from Stuttgart struggling to support?