Porsche once reigned supreme in the Chinese market. Record sales brought in billions of dollars annually for the iconic luxury brand.
But Beijing’s rapid push towards electric vehicles threatens to leave the German sports car manufacturer in the dust. Over a hundred local electric car manufacturers now flood the mega-market with innovative and affordable battery-powered vehicles.
The result: Porsche sales in China have plummeted 40 percent in the past two years!
“Our sales strategy failed,” admit sources within Porsche. The company recognized the issues far too late. It is now clear that the China debacle will have serious consequences.
According to BILD information, Porsche CEO Oliver Blume (56) is firing his China CEO Michael Kirsch (58). His successor is expected to be announced shortly. Additionally, the future of Porsche board member Detlev von Platen (60) hangs in the balance.
Detlev von Platen, Head of Sales at Porsche, is said to have no control over dealers in China
When asked, a company spokesperson stated: “Von Platen is unavailable.” In reality, Porsche CEO Oliver Blume has kept his sales director on a short leash and is personally addressing the China slump. The Porsche CEO has traveled to China to assess the situation firsthand.
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► Despite introducing a new product line, von Platen failed to effectively manage the overloaded dealer network, according to company sources. A top manager states, “He was too passive; he relied on the regional managers he had appointed.” This approach worked in Germany, Europe, and the USA, but the Chinese market proved too complex for Kirsch.
For months, Chinese dealers have been protesting, sending almost extortionate letters to Stuttgart due to declining sales and demanding compensation! Their message is clear: “If you don’t pay, we won’t sell your cars anymore…”
Blume resisted the demands for a long time, refusing to pay. According to BILD information, Porsche has now decided to compensate the dealers. This “ransom” (a double-digit million amount) will be earmarked for training Chinese dealer staff.
Blume is likely willing to pay this price to solve the problem. Internally, criticism is mounting once morest Blume’s dual role (BILD reported in February). Along with his responsibilities at Porsche, Blume also oversees the entire Volkswagen Group.
Blume is essentially putting out fires across the two companies, working seven days a week. “At some point, it’s too much for one person,” says someone close to Blume. There are numerous candidates who might replace Blume, but so far, the supervisory boards of both DAX companies haven’t found anyone capable of fulfilling his dual role.
Porsche’s China Trouble: Sales Slump Leads to Top Management Shakeup
Porsche, the iconic luxury brand known for its high-performance sports cars, has been struggling in the Chinese market. Sales have plummeted by 40% in the past two years, leading to a major shakeup in the company’s top management.
China’s Electric Revolution Challenges Porsche
The decline in Porsche sales is attributed to a number of factors, including the rise of local electric car manufacturers. China has rapidly embraced electric vehicles, with over a hundred domestic manufacturers offering innovative and affordable battery-powered cars. This surge in competition has made it difficult for Porsche, with its heritage in gasoline-powered engines, to maintain its dominance.
Porsche’s Sales Strategy Falls Short
Porsche sources admit that their sales strategy in China has not been effective. The company appears to have underestimated the pace of the electric revolution and the growing appeal of local EV brands to Chinese consumers.
Top Executive Changes: CEO and Sales Director in the Spotlight
In a significant move, Porsche CEO Oliver Blume (56) has fired China CEO Michael Kirsch (58). The decision follows a sustained period of falling sales in the region. The company has yet to announce Kirsch’s successor.
Meanwhile, the future of Porsche’s Sales Director, Detlev von Platen (60), looks uncertain. While sources claim that von Platen has not been able to effectively manage the dealer network – particularly in China – Porsche has officially stated he is “not available for comment.”
Overloaded Dealer Network Creates Internal Friction
Porsche’s dealer network in China has been subject to criticism for being overloaded and poorly managed. Company sources claim von Platen relied too heavily on regional managers, a strategy that worked well in Europe and the USA, but failed to adequately address the unique challenges of China’s market.
Chinese Dealers Demand Compensation
Facing significant sales losses, Chinese dealerships have grown increasingly frustrated, sending letters demanding compensation from Porsche headquarters in Stuttgart. These letters, described as having an “extortionate” tone, threaten to stop selling Porsche cars if their demands are not met.
Blume Resists Demands, but Eventually Relents
Blume initially resisted the dealers’ demands for compensation, but Porsche has now reportedly agreed to provide financial assistance. The “ransom,” amounting to a double-digit million euro sum, will be directed towards training programs for Chinese dealer staff. Blume’s decision suggests a recognition of the urgent need to mend relationships with dealerships and address the ongoing sales challenges.
Blume’s Dual Role Under Scrutiny
Blume’s commitment to both Porsche and the Volkswagen Group is also under scrutiny. As CEO of both companies, he faces a demanding workload, trying to tackle challenges on multiple fronts. This dual role, while ambitious, has brought greater strain on Blume, leading to questions regarding his ability to effectively manage both organizations, particularly amidst major challenges in China.
The Road Ahead for Porsche in China: A Balancing Act
Porsche’s struggles in China highlight the evolving automotive landscape, especially the rapid growth of electric vehicles. The company’s future in the region depends on its ability to adapt to the changing market dynamics and effectively address the challenges of dealer network management, competition, and consumer preferences. The company’s ability to navigate these challenges will be crucial for its continued success in this key market.
