Source: Xinpinlue Finance

Author: Wu Wenwu

Sales continued to decline.PorschePorsche China is like an ant on the hot pan in the Chinese market, becoming increasingly anxious. Changing the top leader cannot solve all of its anxieties.

01 Porsche China changes its top leader

Since the beginning of this year, various news about the luxury car brand Porsche have come one after another, but there is little good news.

"Xinpinlue Finance" noticed that on July 20, Porsche announced that the head of Porsche's China business would be replaced, which quickly attracted news media coverage and heated discussions on the Internet.

Porsche officially announced that Alexander Pollich will take over from Michael Kirsch as President and CEO of Porsche China from September 1 this year, fully responsible for the brand's business in mainland China, Hong Kong and Macau. Kirsch will be transferred to another important position within the group.

It is reported that Alexander Pollich, who will take over as the head of Porsche China in September, is 57 years old and a Porsche veteran. He has worked at Porsche for 23 years and has held several key management positions within the Porsche Group. He has rich experience in international markets.

Detlev von Platen, member of the Porsche Global Executive Board responsible for sales and marketing, said, "We are very pleased to have Alexander Pollich take charge of the challenging Chinese market. He is an experienced sales expert and will further enhance the influence of the Porsche brand in the Chinese market."

Alexander Pollich is a sales and marketing expert. By assigning him to the Chinese market, it is obvious that Porsche wants to assign a new top leader to the Chinese market to change the current difficulties and challenges faced by the brand in the Chinese market.

The direct reason for Porsche China's change of leadership is the continued decline in its sales in the Chinese market.

According to data released by Porsche, in the first half of 2024, Porsche sold 155,900 units worldwide, a decrease of 7% from the same period last year.

But Porsche's sales in the Chinese market fell even more dramatically. In the first half of 2024, Porsche sold a total of 29,600 vehicles in China, a decrease of 35.4% from the same period last year, far exceeding Porsche's average level worldwide.

Porsche's sales in the Chinese market continued to decline, and some media reports commented that Porsche had suffered a major defeat in the Chinese market.

Most market opinions believe that in the face of continued declining sales, Porsche has to replace the top leader of Porsche China.

On July 23, Porsche's stock price hit its biggest drop on record after it lowered its earnings outlook for this year, saying a shortage of aluminum parts could lead to production disruptions for some of its models.

Porsche explained that the supply shortage was caused by flooding at the production facilities of an important European supplier.

Porsche now expects a return on sales of up to 15%, compared with the upper limit of its previous estimate of 17%, and has also lowered its revenue forecast and the proportion of electric vehicle sales.

02 Porsche on the hot pot, getting more and more anxious

Porsche's current situation in the Chinese market is like an ant on a hot pan; it can even be described as "besieged on all sides".

The last time Porsche was exposed in explosive news was in May this year, when media reported that some of Porsche's Chinese dealers "forced" Porsche to abdicate, launched protests and boycotts, and "put pressure" on Porsche's German headquarters.

The reason why some Porsche dealers in China staged a palace coup was that Porsche China chose to "press inventory" on dealers for sales data, and these dealers were under tremendous financial pressure. Later, Porsche and all authorized dealers issued a joint statement to jointly face complex problems, with opportunities and challenges coexisting.

Porsche entered the Chinese market in 2001 and has been growing rapidly since 2015. China has become Porsche's largest single market in the world. In those years, Porsche won easily in the Chinese market and made a lot of money.

Porsche's anxiety in the Chinese market began in 2023. Public data shows that Porsche's global sales in 2023 were 320,221 units, an increase of 3% over 2022. However, Porsche's sales in the Chinese market in 2023 were 79,283 units, a year-on-year decrease of 15% from 93,286 units in 2022.

Among them, in the third quarter of 2023, Porsche's sales in the Chinese market plummeted by 40%. After entering 2024, Porsche's sales in the Chinese market did not improve. In the first quarter of this year, sales fell 24% year-on-year, which caused heated discussions at the time.

As mentioned above, Porsche's sales in the Chinese market in the first half of this year decreased by 33% year-on-year. It can be seen that the continued decline in sales in the Chinese market has made Porsche more anxious.

In the view of New Product Finance, the decline in Porsche's sales in the Chinese market is not only due to Porsche's own factors, but is also more affected by many market factors.

Data shows that among the models sold by Porsche, there are two main modelsCayenneandMacanSales of both models declined in 2023, with the lower-priced, high-volume model Macan experiencing a more severe decline.

Porsche's Chinese owners are the youngest on average, with the highest percentage of women reaching 50%. Porsche previously released data showing that 70% of Porsche's Chinese customers are self-employed entrepreneurs. In the current economic and consumer environment, many customers have postponed or given up buying Porsches, and Porsche should have seen this long ago.

More importantly, China has entered the era of new energy vehicles. China's local high-end new forces brands are constantly moving forward and have also impacted and influenced Porsche.

The new generation of young consumers have a higher acceptance of Chinese new energy vehicle brands. When choosing to buy new energy luxury cars, many young consumers are willing to spend four or five hundred thousand or even higher prices to buy domestic brands. This poses a challenge to Porsche's popular models such as the Macan.

In the past one or two years, the Chinese automobile market has been swept by rounds of price wars. As a luxury brand, Porsche is naturally difficult to stay out of it. The automobile price war has affected Porsche.

Starting from 2023, Porsche dealers in many parts of the country have called for discounts, especially in live broadcast rooms, which has also affected Porsche's brand reputation.

Porsche's sales in the Chinese market have continued to decline, and its anxiety has continued to increase, due to a combination of factors including upward competition from Chinese new energy vehicle brands, the impact of the automobile price war, fierce industry competition, and the changing outlook on luxury car consumption among the new generation of young consumers.

03 Can a change of leadership save the company from declining sales?

Porsche China has replaced its top leader with a veteran Porsche executive with international sales experience to run Porsche's China business. This move is intended to tell the market that China is vital to the Porsche market and that Porsche urgently needs to save its declining sales in the Chinese market.

So, can the change of leadership at Porsche China help it to recover from the decline in sales in the Chinese market? Can the change of leadership solve Porsche China's anxiety?

There is no doubt that Porsche's new head of the Chinese market will optimize and improve Porsche's sales system and strategy in the Chinese market, and may even carry out drastic reforms.

"New Product Finance" believes that although the change of leadership can bring new ideas and new strategies to Porsche China, it is difficult to bring about obvious changes in sales in the short term. This is closely related to the rapid changes in the Chinese automobile market. From a longer-term perspective, Porsche still has a lot to do.

The first thing Porsche needs to do is to defend its basic base and stronghold.

From the current perspective, Porsche's main product in the Chinese market is still Porsche's traditional fuel vehicle product line. Increasing the sales of traditional fuel vehicles is still the key to saving the declining sales.

To stick to the basic sales of fuel vehicles, it is nothing more than reducing prices in exchange for volume. Reasonable price reductions will not damage Porsche's brand image, but Porsche cannot drastically reduce prices, or even offer discounted prices.

Although Porsche has not participated in the price war, it has actually been affected by it. Otherwise, Porsche will have to follow BBA, "withdraw" from the price war, "sacrifice" a certain amount of sales, defend Porsche's luxury car brand status, and maintain and improve economic returns.

In fact, Porsche has long chosen to raise prices against the trend in the Chinese market in an effort to maintain its brand image and boost the confidence of potential buyers, but the price increase has not boosted Porsche's sales.

According to a report by Interface News in April this year, Porsche's official website showed that the prices of some models of the 2024 Porsche Panamera, which was launched in November last year, have been increased by between 70,000 and 100,000 yuan. Porsche's consumers are not very sensitive to the price increase.

recent,BMWAfter withdrawing from the price war, 4S stores began to raise prices, reduce discounts, temporarily increase prices, and even refuse to deliver cars. This kind of scenario should not happen to Porsche, and Porsche should avoid it.

In addition to sticking to the luxury fuel vehicle market, Porsche should accelerate the development of its domestic luxury new energy vehicle business.

This year is a big year for Porsche's new products, including the Macan EV,TaycanTwo pure electric models, the third-generation Panamera andPorsche 911In addition, Porsche also plans to launch the pure electric 718, the pure electric Cayenne and a pure electric SUV model with a higher positioning than the Cayenne.

Porsche is a luxury car brand that still has a strong brand influence in the Chinese market and has its own target purchasing group. Porsche's new energy vehicles still have consumers willing to buy its plug-in hybrid and pure electric new energy models in first- and second-tier cities or cities in economically developed areas.

In the current highly competitive Chinese auto market, major Chinese auto brands have overshadowed joint venture cars and international auto brands such as Porsche in terms of brand promotion, marketing and voice. Porsche should increase its marketing efforts and improve its brand voice.

Some Chinese auto brands, such asNIOAlthough there is a certain degree of competition with Porsche, it has indeed done a good job in fan and community operations. In the future, Porsche should work harder on community fan operations in the Chinese market and focus on localized marketing.

Although Porsche's sales in the Chinese market have continued to decline, Porsche's brand influence remains. Changing leadership is only a key strategy for Porsche to change the current predicament in the Chinese market, but Porsche still needs to do more.

After all, Porsche’s era of winning easily in the Chinese market is over!