How the SUV boom changed Porsche

Friday, 24 January 2020

For generations, Porsche has been known to its loyal fans as a brand with exquisitely designed and engineered sports cars. Specialty vehicles like the powerful 911 sport coupe have been central to its identity.

But in recent years, the Volkswagen Group luxury brand has transformed itself into a maker of sport utility vehicles brand with lower prices and bigger sales.

Yes, Porsche still sells cars but they've taken a backseat to SUVs in terms of sales.

Porsche recently extended its Cayenne family with the rather good-looking coupe version.

Porsche's transition from majority cars to majority SUVs has been a textbook example of how to capitalise on the nation's SUV boom without alienating enthusiastic customers who adore ultra-fast, ultra-luxury sports cars, including the Porsche Boxster and Panamera. The shift has also bolstered overall Porsche sales, which have nearly tripled from 97,273 vehicles worldwide in 2010 to 280,800 in 2019.

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Watch as the latest 718 Boxster S lines up against Porsche's first-ever four-cylinder roadster: the 356 Speedster.

But there was never a guarantee of success.

'When we published the plan that Porsche would develop and sell an SUV, especially the core fan base, they couldn't believe it,' said Klaus Zellmer, CEO of Porsche Cars North America, in an interview. 'They say, 'That's not my brand anymore.' So it's tough. You have to convince people.'

Consider them convinced: in 2019, Porsche had its best SUV sales year ever. The brand's total SUV sales rose 22 per cent from 2018 to 191,999. The Macan was No. 1 with sales of 99,994 vehicles, while the Cayenne was No. 2 with sales of 92,055.

Unlike mainstream brands like Hyundai and Kia, which focused on cars and have had to play catch-up on SUVs as passenger car sales plummeted in recent years, Porsche was ahead of the curve.

When the company launched its first SUV, the Cayenne, in 2003, there was 'lots of handwringing and arms being up about how the brand had lost its way and sold its soul and was never going to be the same,' said Karl Brauer, executive publisher of Cox Automotive's Kelley Blue Book and Autotrader.

The 911 is undoubtedly the most famous Porsche, but it is far from the best-selling.

But there was an 'outcry' among some enthusiasts who didn't embrace the change from the beginning.

'There's people who are the traditionalists who can't see that in order to be financially stable, manufacturers need to adjust to the market and adjust to future trends,' said Mia Walsh, president of the Porsche Club of America's chapter in the Potomac region.

But the company overcame that skepticism with outstanding engineering in its SUVs, just like its cars, analysts said.

'Engineering precision just oozes out of' Porsche vehicles,' Brauer said. 'You can just feel how well made it is.'

Porsche is now getting into the EV segment with its recently-launched Taycan.

A total redesign of the Cayenne has helped fuel the surge in the last two years. Debuted for the 2018 model year, the redesigned Cayenne still has the size of an SUV, but it looks and feels like a grown-up version of the 911, according to car reviewers at the research site Edmunds.

'Our approach always was that whatever we build in whatever segment we're active in, it always has to be a Porsche - it always has to be the sportiest car in the segment,' Zellmer said.

To do so, the brand transferred engineers responsible for the popular Carrera GT mid-engine sports car in the 2000s to build its first SUV from the ground up, Zellmer said.

And when the Macan came about, Porsche didn't withhold the type of sporty qualities that it would use in its performance cars, choosing to include flourishes like ceramic brakes and a standard dual-clutch transmission.

The Macan was a no-brainer for Porsche after people accepted the larger Cayenne.

'Whenever Porsche launches a vehicle, it has that Porsche DNA,' said George Augustaitis, director of automotive and economic analytics at car-shopping site CarGurus. 'So whether you're driving a Cayenne or a Macan, a Cayman, a Boxster, a 911, a Panamera, whatever, they all have this feeling when you start the engine, when you turn the wheel, when you hit the brakes, when you hit the accelerator, it drives like a Porsche.'

The question now is how far will Porsche go?

'They've done an incredible job building their SUVs. We wish they'd produce more,' said Jeff Dyke, president of Sonic Automotive, which operates five Porsche franchises and is one of the largest dealer companies in the country. 'We can't keep them on the shelf.'

There are obvious opportunities for more SUVs, perhaps most notably in the three-row SUV segment, where models like General Motors' Cadillac Escalade and Ford Motor's Lincoln Navigator currently dominate.

Zellmer said Porsche 'would have problems' entering a segment like that while 'being true to its brand values.'

But he also said the company will 'stay flexible and respect customers' wishes.'

Dyke said he expects Porsche to take a crack at a new three-row segment. 'I do believe they will extend the brand and they should,' he said.

Bethesda, Maryland resident Gary Baker, who has owned Porsche models like the 928, the 911 and the Cayenne, said he would consider buying a large Porsche SUV if the brand made one.

'They will make it driver friendly,' he said. 'I wouldn't be concerned whatsoever.'

One change the brand has already announced is its decision to convert the Macan into an electric vehicle beginning 'early' in the 2020s.

The switch has caused grumbling among Porsche fans, much like when the brand originally debuted an SUV.

'That same pushback is happening now with the traditionalists who want to hear the engine roar, want to be able to have all the things that a gas-powered vehicle gets you,' said Walsh.

Zellmer, who recalls Porsche getting heat from fans in the mid-90s for switching from air-cooled engines to water-cooled engines, knows the transition could be rocky in the beginning.

But he believes Porsche fans will embrace the new wave of battery-powered vehicles because the brand is following a similar playbook from its transition to SUVs by focusing first on an electric sports car - the recently debuted Taycan - before turning to its first electric SUV.

'We want to make sure that people understand what Porsche does,' Zellmer said, 'and so far that's worked rather well.'

- USA Today