Among the ultra-luxury car brands that are one level higher than BBA, Porsche is the best car company that combines commercialization and luxury positioning. The annual sales volume of ultra-luxury car brands such as Ferrari and Bentley is less than 150,000 units, while Porsche sells more than 300,000 units a year.
But even the most commercially successful ultra-luxury car brand, Porsche, is now in trouble. In the past, Porsche's label was that it could not be bought at a higher price, but now it is difficult to sell even if it is reduced at a lower price. In the third quarter of 2023, Porsche's sales in China fell by 40 percent year-on-year.
After the decline in sales, many Porsche models were sold at reduced prices, and now it has reached the situation of the collapse of the first system. Models that will be purchased at a higher price in 2022 will already be able to give more than 20% discount by the end of 2023. **After the collapse of the system, the myth of Porsche's value preservation was also shattered, and Porsche's three-year car age retention rate once reached an astonishing 973%, but in the past year, the 1.4 million landed Paramela has depreciated by nearly 500,000.
With the decline in sales and the collapse of the ** system, Porsche's market value has fallen by 34% from its 2023 share price high. So, how did Porsche run into commercialization difficulties?
This article holds the following views:
Price cuts don't necessarily spur Porsche sales. Referring to the beauty luxury goods with similar attributes to luxury cars, for the sake of value preservation, consumers often buy luxury goods more and more, and once the ** declines, it is not conducive to sales. After Porsche's price cut, store sales still jumped to new power stores due to KPI pressure, which also shows that Porsche's sales are still not optimistic after the price cut.
Porsche's sales were slumped by the middle class. Porsche's business logic is that high-end models establish their position in the industry, and people-friendly models are responsible for monetization. Therefore, Porsche is the entry-level version of the super-luxury car, and the main buyers are not the rich, but the middle class on a par with the rich, and the middle class is the class most affected by the economy, and the purchasing power has decreased the most.
Porsche's ultra-luxury status was shaken. Unlike the super-luxury cars, which have a history and culture and are blessed with royal blood, Porsche's brand premium is based on performance leadership, telling the story of popularizing it into everyday cars through the research and development of advanced racing technology. But with the advent of new energy, Porsche's performance advantage has been shaken.
01 Porsche** system collapsed
You can't buy it at a higher price" was once one of the proudest labels on Porsche.
Before 2023, the Porsche that is not worried about selling still has a high selection threshold, and some lucrative configurations are mandatory to lock the options, such as a Porsche Cayenne with a minimum of 200,000 options, and a Porsche Paramela with a higher 240,000 options.
But even so, in the past, Porsche was in short supply, and many car owners had to wait a long time to pick up the car, in order to alleviate the lack of supply, Porsche even started a "** business, and will notify some car owners that they are willing to buy back the vehicle at the ticket price."
It is precisely because of this that Porsche is the "hard currency" of high-end social occasions in China, with a super high value retention rate, and it is also synonymous with price increase.
But starting in 2023, Porsche's ** system has completely collapsed. Paramela, a model that is still increasing in price in 2022, has easily given more than 10% of the concession space this year, Porsche Macan can even give more than 20% of the concession space, and even Porsche's façade model 911 can give more than 4% of the concession space.
The pressure to lower the price of new cars is also passed on to the used car market. In 2022, Paramela, which landed 1.4 million, lost nearly 500,000 in one year, and the myth of Porsche's value preservation was also broken. To know,Porsche once ranked first among models in China in terms of value retention, and the three-year car retention rate once reached an astonishing 973%。
In the first three quarters of 2023, Porsche's sales in China fell by 12% year-on-year, especially in the third quarter, Porsche's sales in China increased by 40% year-on-year.
But price cuts don't necessarily save Porsche, referring to beauty luxury goods with similar attributes to luxury carsFor the sake of value preservation, consumers often buy luxury goods more and more, and once the ** declines, it is not conducive to sales. For example, in order to destock and do e-commerce, Gucci rarely sold some products at a five-fold discount, but Gucci's sales did not increase but declined, and there was a negative revenue growth for 6 consecutive quarters. Judging from the effect of Porsche's price cut, after Porsche's price cut, the sales of departmental stores still jumped to new power stores due to KPI pressure, indicating that Porsche's sales are still not optimistic after the price cut.
From this point of view, Porsche may enter a dead end of lower product prices and lower sales. So why is Porsche suddenly not selling?
02 The frustrated who slipped from the middle class
Among the ultra-luxury brands that are one level higher than BBA, Porsche is the most commercially successful luxury car. Porsche sells more than 300,000 units worldwide. In contrast, the sales of other luxury car brands are only small and beautiful, and Bentley's annual sales are 1There are about 5 cars, and there is only 1 Ferrari30,000 units.
The commercial success is due to Porsche's business model of establishing an industry position in high-spec models and monetizing people-friendly model brands.
Porsche and models with the Turbo S suffix have strong racing performance, winning many championships in the Dakar Rally and setting records at the New North circuit, and the price of a car is often as low as millions and as high as tens of millions. This also means,The above-mentioned models are destined to be exclusive to the rich and have no chance with most people.
After the 918 and other models established the brand halo, Porsche entered the slightly sinking market through other models, although the Cayenne, Macan, Paramela and other models cannot be compared with the 918 in terms of configuration, but the price is more affordable, in the hundreds of thousands to millions. At this time, Porsche has also achieved a more advanced positioning than BMW and Mercedes-Benz, but not as expensive as Ferrari, occupying about one million yuan in the ** belt.
It is more advanced than BBA, but the grade is not as good as the positioning of ultra-luxury cars such as Bentley and FerrariThe main group of buyers who decide Porsche is not the rich, but the middle class who are on a par with the rich. The fact that the core user group is the middle class means that it is easy for Porsche to succeed in a fast-growing emerging economy, and economic development will lead to the rapid accumulation of consumer wealth and a class jump, so China has been Porsche's largest market for the past eight years.
But the problem is that once the economy slows, the income of the middle class is also more likely to fall. After the economic slowdown, the advantageous industries have passed the dividend period, the social volume has changed, the wealth of housing stocks has depreciated, and the wealth of the middle class has also been affected the most. For example, Japan's economy has been shrinking since the 90s, and Waseda University professor Takehisa Shinozaki found in his research that the proportion of the middle class in Japanese society increased from 63 from 1985 to 20189% to 581%。
Back in our country, we can also see the decline in the consumption power of the middle class from the consumption trend of luxury goods. In the third quarter of 2023, the performance of the three major European luxury groups all fell short of expectations, among which Kering's revenue even fell by 9% year-on-year. An important reason for the poor sales was that the Asian market, represented by China, fell short of expectations, with LVMH's revenue in Asia in the third quarter increasing by only 11% year-on-year, down 23 percentage points from the previous quarter.
Sixty percent of luxury sales come from "non-core customers" defined by luxury groups, that is, consumers who do not buy often but have a desire for the brand, that is, the middle class. Considering the stronger anti-cyclical nature of high-net-worth users, the main reason for the poor sales of luxury goods is that the middle class is dragging its feet.
When the largest customer group, the middle class, declined, Porsche's sales came to a dark moment. And at the weakest of Porsche's time, the foundation of the brand is also being shaken.
03 Performance can't be a luxury after all
The logic of ultra-luxury cars is similar to that of beauty and luxury, and they are all brand status achieved by historical precipitation and even royal blood.
For example, Bentley, which was born in England, has pure British royal blood, and it was also used as a royal car for the 50th anniversary of the Queen's accession to the throne. In order to maintain luxury and scarcity, ultra-luxury cars also mostly use experienced craftsmen to assemble the cars by hand.
However, unlike Porsche's logic and the above-mentioned ultra-luxury cars, Porsche relies on the logic of advanced racing technology research and development to popularize the logic of everyday cars to achieve brand premium. In other words,Porsche's ultra-luxury positioning comes from performance and technological leadership. As a result, we can see that Porsche has to participate in rallies and other competitions to demonstrate racing skills.
However, the premium of technology and performance determines that when the technology is iterated, the brand position of the enterprise is easily shaken by players who are better at rolling up new technologies. For example, in 2020, Porsche launched its first all-electric model, the Taycan, in the context of electrification. In 2021, the Taycan delivered 7,300 units in China, with an average of 609 units per month, but in 2023, the Taycan's monthly sales in China fell to less than 300 units.
The sluggish sales of Porsche's all-electric models are due to the lack of product strength. 89.The 80,000 Taycan entry-level model has a range of more than 400 kilometers and an acceleration of 5 from 0004 seconds, the triple screen also goes black from time to time. The Nezha GT of about 200,000 has a range of more than 560 kilometers and an acceleration of 37 seconds. Even with the blessing of faith, in the case of obvious inversion of product power and **, the prospect of Porsche's pure electric models is hardly optimistic.
There are many luxury products that have gone into decline due to technological iteration in history. For example, in 1998, Nokia began to conceive a luxury mobile phone, and in October of the same year, Vertu was born, relying on luxury materials and private customization to sell a mobile phone to millions. However, after the birth of the iPhone, Vertu was taken by Nokia**, and since then it has changed hands several times, and has become a negative asset in the mobile phone with a unique luxury identity.
From Vertu to Porsche, because of the backwardness of product strength, the root cause of losing the market is that it is difficult for products that rely on performance to obtain premium products for a long time to become the top luxury. The generational gap in product capabilities brought about by technological iteration can easily make the so-called luxury experience in exchange for high premiums quickly depreciate and become an "IQ tax".
From this point of view, Porsche's logic of acquiring ultra-luxury positioning based on performance is likely to lay the groundwork for its future decline.