CHENGDU – China is a very demanding market when it comes to the latest, freshest and newest technologies, but Porsche has the potential as a sports car manufacturer to provide the right answers based on its five pillars of focus, according to Franz Jung, president & CEO of Porsche China.
Jung made the comments at a media roundtable here on August 24 ahead of the start of the 2017 Chengdu Motor Show.
“Our five pillars of focus going forward are branding, dealers and customers, financial services, used vehicles and aftersales services,” said Jung.
The German sports car brand will continue to develop those five key elements to upgrade the Porsche brand experience, according to Jung, as sales in China remained strong in the first seven months of 2017, increasing 13 percent to 41,722 units to solidify its leading position in the luxury sports car market.
“This is for me personally a very strong achievement that underscores our strategy which we implemented two years ago is working very well because we outperformed not only Europe, the world but also the competition here in China,” said Jung, who emphasized that despite the Cayenne and Macan SUVs being the major volume providers for the brand, “every car Porsche develops and sells is a sports car, no matter if it’s an SUV or coupe.”
The 911 continues to lead the sports car segment in China with a 38 percent sales growth in the first seven months of the year, while sales of the 718 Boxster and Cayman have more than tripled, taking up more than 70 percent of that segment, making China the biggest global market for the model series. “Every second sports car sold in China is a 911 or 718,” said Jung. The all-new Panamera has received an order intake of more than 7,200 units since last November with over 2,000 of those already delivered, and China is expected to become the model’s largest market sometime next year.
But Jung stressed that Porsche needed to continue to do better, be humble and not “push the numbers.”
One of those areas is dealers and customers, who Jung describes as “standing at the center of everything we do.”
“Our strongest arm in the market is our dealers,” said Jung. “Dealers are our partners and our customers. Everything we do and will do in the future is around customers and dealers.”
All 98 dealers that are operating at the moment are profitable, according to Jung, and dealership No. 100 will be opened within a few weeks. In order to maintain profitability, Porsche is very careful with where it opens new dealers, what kind of format and environment they are opened in, and what kind of investors it works with. It is also supporting dealers with all kinds of training they need in order to take care of customers and their own profitability via the Training Center in Shanghai – the biggest in the world.
And taking care of customers means trying to satisfy them in all areas of the business. “We know now in China there is nothing more important than taking care of the customer,” said Jung. “Loyalty is the name of the game rather than conquest. This is what we take very seriously these days.”
One of the ways Porsche is loyalizing customers is through its own financial services, which currently has a penetration rate of almost 25 percent, compared with just 1 percent two years ago. It has also partnered with several banks under one roof via its financial services to offer additional financial services products, and in July alone it signed about 1,500 contracts.
“Financial services products are the backbones of our business in the future,” said Jung.
Aftersales, which had been a struggle for Porsche in the past, is receiving increasing customer satisfaction with a new organization within Porsche China, resulting in better performance in parts supply and cars fixed right the first time.
“We are now No. 2 in aftersales satisfaction since we launched a trust campaign for our customers about one-and-a-half years ago, and we have seen significant increase in satisfaction of our customers,” said Jung.
Porsche China has also established an organization taking care of the used car business and now offers a program called Porsche Approved, which gives a warranty period of up to 10 years for customers who buy pre-approved used Porsche vehicles. “We see growth every year in this area coming from slow numbers, but that will be in the future a focus area,” said Jung.
It is also beefing up efforts on brand experience, one of the strongest focus areas in China. The Porsche Club, for example, was launched in April with more than 780 membership signed, creating a community where Porsche enthusiasts and owners have the opportunity to share their experience in a much more organized way. The Porsche Experience Center in Shanghai is being built and will be open by yearend, when customers can experience firsthand cars on the track with professional drivers.
“What the customer expects from us is always the best service, strong brand and experiences,” said Jung.
He emphasized that a key strength of the brand comes from the fact that all the cars sold in China are made in Germany and Chinese customers appreciate that fact. As one of only a few luxury brands that have not localized production, Porsche plans to keep it that way for now but “there is no guarantee that in five years there is no plan,” according to Jung.
“As long as we see the market like it is and as long as legally from the government point of view, the framework is ok, we will stick to our strategy not to localize,” said Jung.
Asked about the upcoming implementation of the tough new energy vehicle credit policy, Jung said Porsche will be ready with relevant products but if it cannot fill the requirement by itself, it would find solutions within the umbrella of the Volkswagen Group.
Porsche will eventually bring the production version of the all-electric Mission E Concept to the Chinese market, but Jung stressed that acceptance from the market, charging infrastructure and battery life remain as the three major challenges in China.