Porsche must invest in companies looking to solve issues such as traffic in cities rather than rely on selling cars to survive in the future, according to Porsche finance and IT boss Lutz Meschke.
“Cities want to reduce traffic, therefore we have to look for solutions which fit our brand. Shared mobility is not enough - it will not bring us significant profit share,” said Meschke. “If you want to get a piece of the cake, you have to think about investments in other brands or in traffic solutions. Just to talk about Porsche cars to get the right fit for future mobility, that’s not enough. We must think about investments, starts-ups, to get profitability in other businesses.
“Today our customers are willing to buy two, three, four Porsches, but in future, maybe they will buy one or two and for mobility in cities, they will use other services. We have to think about business models that can balance these potential losses.”
One example is Porsche’s subscription service, already launched in a handful of cities in America. Described by Meschke as a “good starting point,” he said it supports Porsche’s business and reaches younger customers. It will launch in Asia and Europe over the next two years. However, he added, in five years it will not compensate for the reduced mobility in cities, and in turn, reduced sales.
“If 60% of people will live in major cities, then car sales in those cities will be reduced significantly. With our brand, we are limited. It will be a niche and we will not earn enough money to keep the profitability level at 15% (Porsche’s margin aim) and that’s the problem.
We must think about new business models, not only with our own brand but with investments.”
Meschke acknowledged there would come a time when Porsche’s main revenue stream would not come from selling cars. He didn’t give a timeframe, but said: “Of course, we have to try to keep direct selling [cars] as long as possible.”