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Home / Business / Q and A with CEO

Economic shift creates promising dynamic

China Daily | Updated: 2019-10-25 10:10
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Jens Puttfarcken, president and CEO of Porsche China

A1 We welcome China's new policies to spur consumer spending, especially efforts to ease restrictions on car purchases and encourage the development of new energy vehicles. For Porsche, I think it is a great opportunity as our products are setting new standards in the field of sustainability and digitalization.

Our ambition is to become the most successful brand for exclusive and sporty mobility. As China is now stepping up efforts to boost domestic consumption, we see huge potential in a future where electric cars, autonomous driving, and integrated mobility become a common reality for the broader public. We will offer a rich portfolio of products and services for this increasingly dynamic market.

For the next 10 years, Porsche will pursue a diversified approach, with a product strategy focused on three pillars: optimized combustion engines, plug-in hybrid models and purely electric sports cars.

A2 We believe that China's economy is entering a new normal as the government gears up efforts to ensure high-quality growth after years of fast development. Many achievements have been made over the past few years in a successful shift from an investment-driven economy to one that is significantly powered by consumer spending.

It means that the automotive market in China, especially the new energy vehicle segment, has a promising dynamic. China is already the world's largest electric vehicle market, accounting for 56 percent of global EV sales in the first half of 2019. Sales of EVs are expected to reach 3.5 million units in 2023, according to the China Association of Automobile Manufacturers.

Porsche is confident about its growth in China and is constantly investing to pave the way for a journey that focuses on electrification, digitalization and connectivity.

Among a myriad of recent initiatives, Porsche relocated its Shanghai headquarters to the prestigious Lujiazui Financial Plaza in May, as part of efforts to empower employees and provide a more digital and intelligent working environment. We have already invested more than 90 million yuan ($127 million) in the relocation.

Another key move this year was the official setting up of the Porsche Digital China Team in March, as we rev up efforts to drive digital innovation.

In the China market, digital innovation is playing an increasingly important role in fostering experience-based marketing, online direct sales, and point-to-point service. As we embrace new opportunities, we need to think and work in more collaborative ways.

A3 As China is making great efforts to unleash the huge potential of its consumer market, we see it as a key move to sustain the country's healthy growth. It will lead to more opportunities for brands that are well prepared to actively respond to the government's consumption upgrade initiative, and Porsche is supportive of such favorable policies.

Now we are entering an era of new retail, in which offline and online retail work as an integral whole. China is undoubtedly leading the new retail revolution, and companies in the Chinese market are increasingly consolidating e-commerce, physical retail and logistics in a bid to improve efficiency and shopping experiences.

As Chinese consumers seek premium experience for top-end products, we are honored that Porsche cars have been gaining popularity among a constantly expanding customer base, especially the younger generations.

The changes in China are much more dynamic and moving at a faster pace than those in Europe and most of the United States. It means that Chinese customers are almost one generation younger and live in a more digital way.

For Porsche, Chinese customers are aged 35 on average, compared with 53 in Germany and 54 in the United States. Also, Chinese customers display a better gender balance. Female buyers account for 46 percent in China, compared with 11 percent in Germany and 25 percent in the United States. This is something important we need to reflect in the way we produce cars, how we develop cars, and what we offer around the product itself.

A5 The current scenario in the global economy is creating some volatility and uncertainties, and businesses need to take action to ease potential impacts from these uncertainties as early as possible. For our part, we believe that there is no alternative to global free trade.

Porsche is committed to keeping the manufacturer suggested retail price unchanged at this moment despite fluctuations in currency values. Porsche AG has arranged hedging against exchange rate fluctuations. Our MSRP is generally updated annually according to the forward exchange rate, and in principle will not be adjusted with market exchange rate fluctuations.

In the first three quarters of 2019, Porsche delivered 64,237 vehicles in China, a year-on-year growth of 14 percent, leading the rest of the global market. Despite all the uncertainties, we are optimistic about our sales performance in China.

A6 Porsche welcomes China's latest efforts to further reform and open up its economy. Since entering the Chinese mainland in 2001, we have been committed to offering authentic Porsche models and fascinating brand experience, as well as cultivating sports car culture.

As a world leading sport car manufacturer, Porsche fully supports China's new policy to engage more foreign investment and participation. We believe that it will stimulate the vitality of a variety of industrial sectors and consumers will be offered more personalized product options at more optimized prices.

Over the years, Porsche has been making constant investments in China, including our dealership network, Porsche Financial Service, Porsche Consulting, Porsche Engineering, Porsche Experience Centre and Porsche Digital. All these efforts and investment from Porsche provide platforms and opportunities to a wider scope of Chinese fans and customers who favor our sports cars with excellent performance and everyday usability.

We were privileged to participate in the first China International Import Expo last year, and will continue our presence at this year's expo. We believe the CIIE is a significant move for the Chinese government to give firm support to trade liberalization and economic globalization, and actively open the Chinese market to the world. We will bring our first electric sports car, the Taycan, to the expo this year, as well as other hybrid models under the theme of electromobility. We're willing to grow together with the Chinese economy in a new round of high-level reform and opening-up strategy.

What's more, benefiting from the Belt and Road Initiative, Porsche has been using rail transport for its transcontinental logistics since April 2019. Compared with traditional sea transportation, the 20-day rail route shortens the period required for vehicle logistics by up to three weeks, despite different track gauges and multiple container transfers. Our customers in southwestern China will receive their new vehicles much more quickly.

A7 Technology is changing every part of our world. For the automotive sector, companies are now increasingly leveraging digitization, automation, and other potential disruptive technologies to develop new vehicles and business models. Electrification, digitalization, autonomous driving and connectivity are important topics for mobility in the future.

With the continuous development of connectivity and autonomous technology, we are set to embrace a future when a car will not only help people reach their destination, but also serve as a platform for drivers and passengers to access information and services in a more interactive way during their time in transit.

Cars will also be increasingly upgradable in terms of technology, and customers will be more savvy about technological advances and demand more personalized features in their private cars. Also, the automotive revenue pool will significantly rise and diversify toward data-driven services and other personalized mobility services.

All of these will mean opportunities for Porsche as we head toward the future with continuous innovation. For example, the Panamera Turbo S E-Hybrid Sport Turismo is the first time we have had an E-hybrid as our flagship model, which demonstrates our confidence in the performance-oriented hybrid technology.

Also, electrification will become an inevitable trend as major markets, including China and Europe, are now speeding up the upgrading of vehicle emission standards. Porsche is prepared to deliver the right products to meet market needs as we leverage our technological innovation to create more sustainable solutions for the development of driving experience.

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