Porsche sees opportunity to broaden subscriptions

Porsche sees opportunity to broaden subscriptions

- in Automotive

Zellmer: Looking for elusive demo

MONTEREY, Calif. — A year after launching an experiment in vehicle subscriptions, Porsche is mulling a broad U.S. expansion of the pilot.

Porsche Passport has lured a younger and wealthier clientele to the Porsche brand, Porsche Cars North America chief Klaus Zellmer told Automotive News, and 80 percent of the people who use the program are new to the brand.

About 120 people have cycled through the pilot program in Atlanta, which starts at $2,000 a month and offers unlimited vehicle swaps, unrestricted mileage and on-demand access to Porsche models.

“When we started the program, we said, ‘Let’s find out whether somebody’s out there who currently doesn’t engage with Porsche because they don’t want to commit to a car purchase or a leasing scheme,” Zellmer said at the Porsche Rennsport Reunion event here last month.

Porsche’s interest in expanding the program reflects what the industry believes is a seismic shift from vehicle ownership to transportation access. Subscription programs offer an alternative to traditional lease, finance or cash-purchase models.

“Have the car for a month, and if you don’t like it any more, we’re good,” Zellmer said.

The lower upfront investment model is attracting a younger clientele to the Porsche brand. Passport customers are 5 years younger on average than Porsche’s typical new-car buyer, the automaker is discovering.

They also have more disposable income — subscription members make, on average, $100,000 more annually than Porsche’s new-car buyers, Zellmer said.

“It tells us that there is a target group out there that we obviously, so far, have not engaged with the brand ,” Zellmer said.

But not all automakers have had the same degree of success.

Lincoln said the pilot it started this year in California has had little demand. Many of those who sign up cancel after only one or two months.

“I’ve been surprised how few people are genuinely interested in that type of ownership,” Robert Parker, Lincoln’s director of marketing, sales and service, told Automotive News last month. “If you had asked me a year ago, I would have said this is the next big thing. A lot of people are struggling to make the math work.”

Not even Porsche is certain of the concept’s profit-making potential.

“Currently, it’s a plus/minus zero business,” Zellmer said. “We have to find a way to make money.”

Porsche has not yet had to remarket the 65 vehicles in the Passport pilot program.

“The biggest cost factor for these programs is ‘what’s the residual values of those cars after a year?’ ” Zellmer said. “It’ll be another six weeks and then we know.”

The concept’s future also hinges on dealer buy-in. Currently, Porsche manages the program along with Atlanta-based Clutch Technologies.

“The big question now is what’s the role of the dealers in a subscription model?” Zellmer said. “A dealer would only engage in a program like that if you can make money.”

Robert DiStanislao, president of Porsche of the Main Line in suburban Philadelphia, believes Porsche’s investment in the subscription program would be better spent in helping dealers sell more cars.

“I would prefer rerouting those funds toward subsidizing the Macan lease,” DiStanislao, a member of the Porsche Dealer Board of Regents, said of the brand’s compact crossover. “The Macan is at the core of bringing in new customers.”

The capital could also help customers offset long-term ownership costs. “The No. 1 reason people don’t chose Porsche is the fear of maintenance costs,” DiStanislao said.

The dealer said he is not concerned that the subscription program is taking away sales, because Passport volumes currently are low.

“The incremental business generated through the subscription program is insignificant compared to the flow of customers into dealerships for the Macan,” DiStanislao said.

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