Porsche Says China Growth to Quicken Next Year After Macan

Porsche AG’s China chief executive forecast sales growth in the country will accelerate next year, fueled by the introduction of the Macan compact SUV and a push to expand into the inner regions of the country.

“The epicenter of the world has for many reasons moved from the U.S., across Europe and now is sitting in Asia, and China is obviously the powerhouse of Asia,” Deesch Papke said during an interview yesterday in the southern city of Foshan, where Porsche is introducing its newest Panamera cars. “We’re extremely optimistic about the success of Macan.”

The Volkswagen AG unit has benefited from China’s love for sport utility vehicles -- more Cayennes are sold there than in any other country -- even though Porsche SUVs sell for triple what they cost in the U.S., with the cheapest model starting at 922,000 yuan ($150,000). The company, which expects global deliveries to reach 200,000 by as early as 2015, is counting on China demand to sustain growth and to surpass the U.S. as its biggest market by next year.

Papke, 51, said sales are on pace to increase about 20 percent this year. Growth will accelerate next year as the Macan goes on sale from the second half of 2014, he said, without specifying figures. The company plans to almost double its number of dealerships to 100 within a year or two, from 56 now, he said.

Last year, Porsche delivered 31,205 vehicles in China, up 28 percent. In the first eight months of this year, sales growth slowed to 17 percent to 21,092 cars.

Consumer Perception

“Porsche occupies a unique position in China, with consumers regarding it as higher end than BMW, Audi or Mercedes-Benz,” said Zhu Bin, a Shanghai-based senior analyst at researcher LMC Automotive. “That will keep it selling well in the next two or three years, and with the Macan, those looking to upgrade from BMWs or Mercedes will choose it.”

Longer term, Papke said Porsche is planning expansion westward into China after getting the eastern seaboard “pretty much covered.” The company is also targeting the young, even kids.

“We need to start finding access to the younger population and China is no different,” he said. “The car is no longer the thing that students dream of. They talk about smartphones, they talk about Internet access. We need to bring the Porsche part of that dream more relevantly in.”

Spyder Hybrid

One of those dreams is the 13.4 million yuan 918 Spyder hybrid supercar, whose deliveries will begin next year. The automaker has “comfortably achieved” its target number of orders for the car, Papke said, without specifying a number.

Papke, who’s from South Africa, joined the company in 2005 after working for Volvo, Land Rover and Daimler AG’s Mercedes-Benz. Before taking over China operations from Helmut Broeker in July, Papke was a director overseeing the Middle East, Africa, India, Southeast Asia, Australia, New Zealand, Japan and Latin America. Although he grew up adoring the Porsche 930, he never got to drive it and only got to sit in one in a museum, he said.

On more recent events, Papke said he doesn’t see sales affected by the Chinese government’s austerity drive since President Xi Jinping’s new administration came into power earlier this year.

“Ten million people a year are going to the middle class - - that’s the population of Sweden -- so it is such a powerful driving force for us,” Papke said.

— With assistance by Alexandra Ho

(Updates with comment from analyst in sixth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE