Original link: https://www.latepost.com/news/dj_detail?id=1708
In 1948, the first “Porsche 356” was allowed to go on the road in Stuttgart. Since then, Porsche has transformed from the design studio of Ferdinand Porsche and his son to the world’s leading ultra-luxury brand. The ultimate pursuit of high performance, a clear product portfolio, well-known design capabilities, and 75 years of brand accumulation have established Porsche’s unique position among luxury car brands, not only gaining applause, but also maintaining extremely high profitability.
In 2022, the Volkswagen Group will sell a total of 8,282,600 vehicles, of which Porsche’s sales will account for less than 4%, but its profits will account for one-third, making it a veritable “cash cow.” The return on sales is as high as 18%, far exceeding the average return on sales of the Volkswagen Group (8.1%), and also higher than the luxury car brands such as Lamborghini, Audi, Bugatti, and Bentley under the Volkswagen Group. In September last year, Porsche was listed on the Frankfurt Stock Exchange, and its market value once surpassed that of Volkswagen Group. As of press time, Porsche’s market value is about 52 billion euros, and Volkswagen’s is about 73 billion euros.
Porsche entered the Chinese mainland market in 2001, and currently has 151 sales outlets and 750,000 car owners. China has been the largest single market for Porsche in the world for eight consecutive years. In 2022, Porsche will sell a total of nearly 310,000 vehicles worldwide, and more than 93,000 vehicles will be sold in China, accounting for one-third of global sales.
But in 2022, Porsche’s sales in China will decline for the first time. This year, Porsche’s global sales increased by 3% year-on-year, Germany increased by 3%, Europe except Germany increased by 7%, other overseas markets and emerging markets increased by 13%, North America had zero growth, and the Chinese market decreased by 2%.
Michael Kirsch, President and CEO of Porsche China, explained in an interview with the media that Porsche’s decline in the Chinese market was mainly due to the epidemic, chip shortages, and conflicts between Russia and Ukraine, and there was some pressure on sales and supply.
“The macroeconomy does make a small number of people wait and see, but most of the reasons are on the supply side rather than the demand side. It can be seen that with the further strengthening of the economy this year, our sales have already reflected that everything is going to It is developing in a good direction.” Hong Sheng, vice president and chief financial officer of Porsche China, told “Later Auto” at an event in June.
In addition to the impact of external factors, China’s auto consumer market is still undergoing a drastic change. In 2022, the sales of new energy vehicles will increase by 93.4% year-on-year, and the penetration rate will reach 28%. In 2023, the Travel Association predicts that the penetration rate of new energy vehicles will reach 36%.
New energy vehicles are rapidly replacing fuel vehicles. The market share of Tesla, BYD and new Chinese automakers is growing, while the sales of some traditional auto brands are shrinking. Hong Sheng said that Porsche is paying close attention to the changes in the Chinese market, but the high-end market where Porsche is located is still relatively stable.
“China’s new energy vehicles have been quite successful in a reasonable price range, but there is no real winner in the field of luxury cars.” Hong Sheng said.
Porsche is the first automaker to deploy new energy vehicles in multiple luxury car segments. At the 2015 Frankfurt Motor Show, Porsche debuted the Mission E concept car, and launched its first pure electric sports car, the Taycan, four years later, ushering in the electric era. The Porsche Panamera and Cayenne also offer hybrid versions.
In 2019, on the eve of the launch of the Taycan, Porsche announced an ambitious transformation plan: by 2025, pure electric and plug-in hybrid models will account for 50% of new cars sold. Subsequently, Porsche formulated the next five-year plan: by 2030, pure electric models will account for more than 80% of its new cars sold.
At present, the proportion of Porsche’s electrified models is not high. In 2022, among the approximately 310,000 Porsche vehicles sold worldwide, the top three models are the SUV Cayenne (95,600), the Macan (86,700) and the sports car 911 (40,400). The Taycan, Porsche’s only pure electric coupe, which was launched in September 2019, will sell about 35,000 units in 2022, a year-on-year decrease of 16%.
Porsche still needs more products to open up a new market of new energy. In the plan, Porsche will launch the pure electric version of the Macan in 2024, and will also launch the pure electric version of the 718 and the pure electric version of Cayenne in the mid-2020s, and add a pure electric SUV positioned above Cayenne.
Although these products have not yet appeared, Porsche’s goal of transforming to new energy is unswerving. Under this strategy, China’s strategic position as the world’s largest new energy vehicle market has become more prominent.
According to the latest statistics, the average age of Porsche’s Chinese customers is 35 years old, which is lower than that of other major markets (Europe and the United States are over 50 years old), and the proportion of female customers is basically the same as that of men. The importance of the Chinese market and the particularity of customer groups have made Porsche executives realize that more attention must be paid. In order to better understand the Chinese market and understand the new energy vehicle consumption innovation led by the Chinese market earlier, Porsche has gradually increased its R&D investment in China. In 2015, Porsche Engineering Shanghai subsidiary was established; in 2018, the China Innovation Office and digital team were established; at the end of the same year, Porsche Ventures entered the Chinese market; in 2021, Porsche Digital Technology was established; in 2022, the Chinese branch of Porsche R&D was put into operation.
Janice Tsang, head of Porsche China Innovation Office, introduced that the establishment of an innovation office will help Porsche executives see the innovation vitality of the Chinese market and make more correct decisions. It is an “accelerator to promote the company’s internal transformation.” Since its establishment, the Porsche China Innovation Office has promoted a total of 45 proof-of-concept projects, and launched the “Innovation Acceleration Camp” last year – similar to a business incubator, which selects start-up companies and provides cooperation opportunities and resource support in 6 months Complete an experimental project and present the results to Porsche’s business units.
In 2022, the Porsche China Innovation Office has received a total of more than 100 applications, and 8 start-up companies have cooperated with various business departments of Porsche to implement 6 proof-of-concept projects.
On June 12, the latest project was shown to the public: two start-up companies jointly modified a Porsche Cayenne, allowing rear passengers to watch AR street views through the left and right windows. This modification does not involve the car layer, so only two iPhones are glued to the front windshield to replace the camera. The window glass is made of special materials, which can simulate the projection of nearby buildings and special effects like AR glasses. Among them, the vision-based AR map comes from the start-up company “Seeing”, and the window projection display comes from photonic crystal technology.
The experimental project developed for 6 months can only do some preliminary demonstrations, but it has already allowed Porsche’s business department to see the various possibilities of subsequent product development.
Proof-of-concept project completed by startup company Xijian and Photonic Crystal Technology on Porsche Cayenne
High-quality early projects that match the strategy of the Porsche Group have the opportunity to receive investment from Porsche Ventures. According to Ulrich Thiem, Managing Director of Porsche Ventures, Porsche Ventures is funded by the Porsche Group with an initial scale of US$250 million. The investment areas are mainly divided into four parts: the automotive industry chain and travel; smart enterprises; sustainable development, including carbon neutrality , circular economy, supply chain sustainability; and other areas other than travel that have strategic or financial significance for future development, such as flying cars and electric bicycles.
The investment in the four major areas requires close strategic coordination with the group, and the business department will claim it and “promise to cooperate with this project” before it will receive investment. But the last one, Porsche Ventures will have a relatively strong autonomy. Different markets have different strategies. Ulrich Thiem said that Porsche’s investment in the Chinese market will tend to be the fourth.
Different from venture capital whose ultimate goal is financial return, Porsche Venture Capital’s first appeal is to have strategic value for the Porsche Group. “We are a corporate venture capital (CVC), so we should consider the first C—Corporate, and we will not use financial investment as the only indicator. Of course, financial investment is definitely an important point that we will pay attention to.” Ulrich Thiem said.
Cooperation with Porsche’s business department can be reached at the A-round stage, and there are not many projects that meet this requirement. Since its establishment, Porsche Ventures has only made four investments in China: Weilai Capital, Hangzhou Vientiane Technology, a virtual idol, Yuanzhu Smart, which is a 3D printing company, and DianShare, an energy Internet company just announced on June 12. science and technology.
Gong Ting, head of Porsche Ventures China, told “Later Auto” that the investment in Weilai Capital in 2019 was mainly because Porsche Ventures had just been established at the time, and hoped to use the strength of other investment institutions to open up the local “friend circle”. Vientiane Technology, Yuanzhu Intelligent Technology and PowerShare Technology have all reached long-term cooperation with Porsche’s business department.
By doing innovative projects and investing, Porsche hopes to open a window in the Chinese market. “China’s start-up ecology is more ‘volume’ than foreign countries. When a new subdivision track comes out, venture capital institutions can observe 20 or 30 companies in the US market. But in China, if you tell me that there are 300 to 500 companies, I’m not surprised at all.” Gong Ting said. He believes that this has something to do with the general environment and the mentality of entrepreneurs. Porsche, on the other hand, must remain sensitive to changes in the market, but also not be affected by the impetuous environment. It must strengthen its long-term strategy and continue its classics.
The following is an interview with Hong Sheng, Vice President and Chief Financial Officer of Porsche China, Ulrich Thiem, Managing Director of Porsche Ventures, Gong Ting, Head of Porsche Ventures China, by “Later Auto”:
There’s no winner in the luxury segment yet
Late Auto: Porsche’s revenue this year is expected to be 40 billion to 42 billion pounds, an increase of 6.4%-11.7% compared to 2022, and 2022 will increase by 13.6% compared to 2021, and the revenue forecast is more conservative Yes, what is the reason?
Hong Sheng: There are specific reasons for setting the global revenue target. Every quarter, we will have a very formal conference call to conduct rigorous and detailed reports and discussions on global revenue and future expectations. Since we are a listed company, I cannot interpret and interpret the global revenue forecast on behalf of the headquarters.
From a global perspective, not only the Chinese market, but also other markets in North America, Germany and Europe, as well as other markets around the world, each market has different expectations for overall growth this year.
Porsche put forward a concept very early on: Our financial goals focus on quality rather than quantity. We would like to see a clearer positioning of the brand. The Porsche brand is a high-return, high-profit company, which we must insist on. When it comes to revenue, there are many factors that come together.
Later Auto: Porsche’s global sales in 2022 will increase slightly by 3%, but China will decrease by 2%. How do you summarize this?
Hong Sheng: 2022 is a very severe year for the overall environment in China, including the economic environment at that time, and many of the key issues that people pay attention to are not in the consumer field. The logistics of imports also have a lot of impact. In addition, the turbulent global situation has also put a very severe test on our supply chain. There is also the chip crisis, which will also be a shortage in the international environment in 2022.
The macro economy does make a small number of people wait and see, but most of the reasons are on the supply side, not the demand side. It can be seen that with the further strengthening of the economy this year, our sales have already been reflected. Everything is going in a good direction.
Late Auto: China’s new energy market grew rapidly last year, with a penetration rate of 27.6%. This year, the China Travel Association predicts 36%. In the past, Tesla, BYD and new forces have risen, but they have not touched the market range of Porsche. How do you expect the high-end market to change in the next few years? How is Porsche defending its position?
Hong Sheng: Compared with other Porsche markets, Chinese car owners are the youngest, and the proportion of female car owners has reached the highest, about 50%. Therefore, we are very concerned about the preferences of the new generation of young customers. For example, they have a stronger demand for vehicle interconnection and digitization. I personally think that China’s electric vehicle products have done quite well in terms of appearance, quality, and driving performance, and they are far ahead in the global market in terms of in-vehicle interconnection, digitalization, and intelligence. China’s new energy vehicles have been doing quite well in a reasonable price range, but in the luxury segment, there hasn’t been a real winner that stands out. We have also seen that some brands have launched high-end models, hoping to bring the price to the price range of luxury brands. But what Porsche pays most attention to is brand value and brand history. This inheritance and accumulation will be reflected in all aspects of products and services. We respect and appreciate the efforts made by other brands, and welcome competition from all sides. We are confident in making our own products well.
In addition, we are always paying attention to and evaluating the development trend and dynamics of the Chinese market, but we will not blindly put all the leading technologies on the market into Porsche cars, because Porsche is most concerned about the driver himself, and we want to Understand the most real needs and expectations of Chinese customers. Therefore, we continue to expand the local R&D matrix in China, including the offices of Porsche Engineering in Beijing and Shanghai, Porsche Digital Technology, and the Chinese R&D branch established early last year, all of which provide Chinese consumers with products and solutions that are more in line with the needs of the local market .
Late Auto: Does Porsche’s advantage now translate to electric cars? I saw a very strange data. Last year, the sales of Porsche Panamera increased by 13% year-on-year, while the sales of Taycan decreased by 16% year-on-year. Why is this so?
Hong Sheng: The data you mentioned refers to the overall sales of Porsche models worldwide, and it also involves the objective situation in other markets. As far as the Chinese market is concerned, Panamera is a long-term product. When it first entered the Chinese market, customers were very enthusiastic about it. Acceptance also takes time. After all, the positioning of our cars is there. It sometimes takes time for Chinese consumers to understand a brand like Porsche. We have many loyal Porsche fans. There is a reason why they will form a high stickiness after they come into contact with Porsche culture and our cars.
The Taycan is Porsche’s first purely electric sports car, and we’ve built it into an electric vehicle that’s all about Porsche’s pure driving pleasure. We are still very confident in our products. In terms of sales, I think we should not just look at the volume. More importantly, we have successfully expanded a new user group through Taycan. About 72% of Taycan users choose the Porsche brand for the first time.
Hong Sheng, Vice President and Chief Financial Officer of Porsche China
Venture capital institutions with strategic attributes
Late Auto: Your positioning is CVC (Corporate VC). As a company (C), Porsche has a very high standard. If it is not the best, it will not be used, and VC invests in early A-round projects. Early projects are usually relatively rough. Isn’t it a bit difficult for you to get the business department to nod and have an intention to cooperate with a project at the A round stage?
Ulrich Thiem: Porsche will provide investment guidelines, which will be formulated by our supervisory board and internal investment vehicles. When we clearly want to invest in early-stage projects, we will give the invested companies long enough time for them to grow. The running-in with the business you just mentioned exists, and this is what the investment team has to do. The post-investment management of any fund must provide so-called empowerment to the invested companies. As an investment department, one of our empowerments is how to integrate with the business.
In terms of investment guidance, we will have a certain period of time during which we will continue to confirm whether the invested company can grow steadily and bring strategic value. At the same time, after the first investment in a company, we will have at least one or two rounds of additional power. Maybe after a period of time, we have not clearly seen its strategic value, but we still think this company is very promising. potential, we will continue to add. We invested in Vientiane Technology and Yuanzhu Intelligent in China in 2021, and we will add them in 2022. In fact, this is not a conflict, but a place where our entire organization and business departments need to learn and cooperate.
Later Auto: Why is the guidance of the board of supervisors to do venture capital? Since it is not aimed at financial returns, projects in the later stage are more mature and easier to generate synergy with your business department.
Ulrich Thiem: Porsche Venture Capital is just one of Porsche’s investment vehicles. There are different departments within it, and they have their own focus on different stages and types of start-up companies. Porsche Ventures is a part of the overall strategy. It has more decision-making freedom and needs to diversify decision-making risks. Early participation and intervention may save costs later, but it does not mean that we do not consider C round or later projects at all.
Porsche has the concept of Company Building, but there is no official Chinese name yet, which is similar to the concept of incubation + angel investment. They contact potential founding teams directly when a company is still in its infancy, much earlier than venture capital teams do. Then there is the early stage investment, which is the Porsche venture capital team. At Porsche headquarters there is also a department dedicated to so-called strategic investments and mergers and acquisitions.
Porsche previously led a C-round investment project – Group14. This project was positioned as a strategic investment project from the very beginning, skipped the early rounds, and completed it directly as a strategic investment. This is accomplished by the venture capital team empowering the strategic M&A team. We also evaluated internally how much money we could save if we invested in the early A round, but this project was approached later.
Gong Ting, head of Porsche Ventures China (left) and Ulrich Thiem, managing director of Porsche Ventures (right)
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