Porsche goes to the gorilla!
Oct 12th, 2009 by stateofthebrand
Author: Jason Voiovich Ecra Creative Group
Key Points: 1. Most “special financing offer” auto advertising is so bland, you hardly notice. Not this time. 2. Porsche is under tremendous sales pressure, volume down some 27%, and special offers seem to be helping the cause. 3. However, price discounts undermine the value proposition of any brand - but especially lux brands like Porsche. Say hello to deteriorating margins.
Three words undeniably mean “sale” at your local car dealer.
Giant. Inflatable. Gorilla.
It conjures images of smarmy guys in plaid suits and plastic smiles. Add in stale popcorn and balloons for the kids, and you’ve got the makings of a busy Saturday afternoon.
When you arrive, you can count on a bevy of smart-sounding deals: X% financing (where “x” equals some number less than 1.0%), Cash Back deals, Bring Back deals. You can expect to learn what “taking delivery from dealer stock” means. You’ll start to wish you listened more carefully to the super-fast-disclaimer-talk the last time you saw the television ad.
It’s also pretty easy to guess what car nameplates you’ll see on the lot: Chevy, Ford, Dodge, Chrysler, Jeep, Buick, Kia, Hyundai. You might see the occasional Honda or Toyota, but don’t get your hopes up.
It is so common, and so predictable, that it becomes background noise. In the advertising biz, this type of promotion is akin to wiping your backside with your ad budget - no one is listening anymore.
But here’s where it gets interesting.
My wife and I were enjoying a quiet night at home when we caught this little advertising gem:
From who? A 1.9% financing deal? For what? A Porsche!
You’ve got to be kidding.
You see, when I grew up, if you had to ask how much the new Porsche cost, you couldn’t afford it. But clearly times have changed for our fancy pants German friends. They must feel like they’ve got to bust out the “monster sale” gorilla in order to get us to pile the kids in the station wagon and head down to our local Porsche dealer.
Just take a step back, however, and you understand the temptation.
We’ve all heard about “grim economic conditions”, and Porsche (counter to some not-so-sage prognostication a year ago) is not immune. Revenues are off 14% globally from a year ago for Porsche. Worse yet, sales skidded over 27% during that same time. (Translation: Entry-level buyers aren’t snapping up the lower margin Boxsters, but 911 sales are still okay).
In dollar terms, that a $4 billion loss on global volume of 34,000 units. Yikes.
The sales incentives do however seem to be stemming the tide: Q1 results are up 15% from a year ago. But it’s temporary. Our friends at General Motors rode this pony for years, right over a cliff. In 1994, the average GM vehicle left the lot only after a $900 sales incentive. By 2004, that number climbed to $4000. In other words, GM trained its customers to buy only when they saw the gorilla. Now I’m not saying Porsche is the next GM, but they had better be careful; former “high-end” retailer Macy’s is in a sales-incentive pickle, and may never climb out. Lux brands are not immune from the just-put-it-on-sale drug.
Of course, the Porsche group is a bit insulated due to its affiliation with Volkswagon and Audi, but the sports car moniker has struggled in recent years with its image. What used to be a pure sports car has become a crossover SUV (the Cayenne) and now a four-door sedan (the Panamera).
The real question is not the 1.9% financing sales incentive itself. The need for sales incentives is a symptom of a broader problem. The real problem is the degeneration of the Porsche brand. Without a clear differentiator between a Porsche and say, a Lexus, BMW, or Mercedes, the company forces itself to compete on their terms. Not smart.
Porsche would be well advised to focus on what it is good at: Rockstar-quality sports cars. Let Audi handle the luxury sedan and crossover market. Let VW speak to the people.
Because when everyone can get any kind of Porsche they want, why would you want it?
Related Links: Porsche 1.9% Financing Ad Autoblog Article Forbes Article Official Porsche Offer Site
Special Note:
The Federal Trade Commission recently passed an advisory stating that bloggers must disclose their financial ties to organizations they write about. Well, I’ve never received so much as a free pencil from any subject in any post over the last (nearly) four years. I don’t intend to start now. However, I would be happy to reconsider my position if Porsche would see clear to providing a complementary vehicle for an “extended test drive”. I am partial to the Boxster S, but really, any vehicle would do. Please? C’mon guys? Call me!
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