Porsche Exits the Detroit Auto Show
The Detroit-centric automotive press is angry and upset at Porsche's seemingly arrogant decision to pull out of the North American International Auto Show in Detroit, Michigan. After all, for fifty years, the Detroit Auto Show has been one of the most important auto shows in the world. There was a time, not so long ago, when GM, Ford and Chrysler dominated the all-important US auto market. Those times have past and the importance of the NAIAS/Detroit Auto Show has faded.
Toyota is well on its way this year to dethrone GM as the world's largest auto manufacturer (as measured by units sold). Ford's sales are in freefall with no bottom in sight. Daimler is dumping Chrysler -- with Chrysler's sales also in freefall.
Porsche doesn't sell that many cars in total, and on a purely market-driven basis, Detroit isn't where it sells its expensive vehicles. In 2006, Porsche sold 34,227 units in the US. Honda sells that many Accords every month. And where does Porsche sell those cars? We rarely get a look at a manufacturer's sales by region or state, but in the Automotive News article published online 11 June 2007, Porsche is quoted as saying it sold only 290 (less than 0.01%) cars in Michigan in 2006 compared with 8,827 in California (25.8%), 4,177 in Florida (12.2%) and 2,172 in New York (6.3%).
Those figures alone tell the story and confirm that we've been putting out there for years: Los Angeles is the center of the automotive universe when it comes to sales and trends. And the Detroit Auto Show is becoming increasingly irrelevant on the world stage as the American manufacturers fall behind the Asians and Germans in technology, engineering and design and emerging markets like China pick up steam. The US market is also a saturated market at the lofty and exotic levels of Porsche. While the US market still is Porsche's number one market -- by far -- its not where the growth is.
I pulled this interesting information out of the Porsche Group Shareholders' Letter for the first six months of its 2006/2007 fiscal year. "Even the difficult market environment in the USA does not overshadow [Porsche's] optimism." "Porsche aims to match the high prior-year level of unit sales and revenue with the growth markets in Eastern Europe and Asia contributing substantially to sales."
Let me translate: Eastern Europe = Russia. Asia = China. In Russia, Porsche had just 10 dealers in its previous fiscal year. It will be adding 6 dealers for total of 16 dealers -- a whopping 60% increase. In China, Porsche is increasing its number of dealers from 12 to 20 -- also in the current fiscal year -- another 60% increase. Porsche says its growth is only restri
cted by the limited availability of qualified service and sales employees who have to be hired and trained accordingly.
The next "big thing" from Porsche will be the four-door Grand Turismo Panamera. This new six-digit priced Porsche will have four doors and a front-mounted engine -- the first Porsche sports car with a front-mount engine since the demise of the 928 some 12 years ago. Porsche plans on a 2009 launch and it's not going to be introduced in the US. It will be introduced either at Frankfurt, Paris or Geneva. For Porsche, the most important US market is Los Angeles, not Detroit, and as far as Porsche management sees things, the Detroit show just "ain't what it used to be" on the world stage.
Apparently Porsche had begun reducing the number of shows in which it participated in a few years ago. Who knew? For the 2007/2008 North American auto show circuit, Porsche will participate in the following markets: Los Angeles, Chicago, New York, Miami, Toronto, Dallas, San Francisco, Philadelphia and Washington D.C. Porsche says it wants to reorient its marketing to get more "customer contact".
Hmmm... the last "customer contact" I had with Porsche was with some very Arian representatives at the LA Auto Show who told me that the burnt orange color shown on the 911 Targa 4S was available by special order only (don't expect to see it named on the Porsche website) and that Porsche had no plans on offering either Bluetooth or automatic headlights anytime soon on its sports cars. The basic Porsche message hasn't changed: We are the best. There is no substitute. Take it or leave it as we offer it. And be happy to pay the egregious prices for options that should be standard.
Keith Crain, publisher and editor-in-chief of Automotive News, laments Porsche's move in his 18 June 2007 lead editorial "It's penny wise, pound foolish." Mr. Crain rightly points out that car companies come to Detroit, not to sell cars to customers, but to show off their latest and greatest production and concept models to the rest of the world.
Journalists from all over the world -- from Asia to Europe, all over the US and even from South America -- come to cover the event. This is true. But Detroit is no longer the center of the car universe and it's increasingly irrelevant on the world stage. And there are other, bigger events around the world for the same journalists to cover. And they do.
In the internet age, images, video and information fly around the world at the speed of light. And those same journalists will also be in Shanghai, Geneva, Paris and Frankfurt. The North American market currently excludes large manufacturers like Renault, PSA Peugeot Citroen, Fiat, Proton, etc. They seem to survive without a presence here.
Porsche's competitors also waste lots of money in Detroit. How many units does Maserati, Ferrari, Bentley or Aston Martin sell in Detroit? I don't know; but I can guess it's a very small number. These brands, Mr. Crain believes, will outshine Porsche in Detroit and that Porsche will regret its decision to leave. Returning to Detroit will be difficult for Porsche because it gave up its lofty preferred space in the main Cobo Hall and it would end up in the basement with the Chinese.
Fat chance Porsche will ever admit to any mistake or that it is anything other than perfect. That said, I don't see this move as anything that will hurt Porsche. The customer base for its sports cars is extremely loyal and most of them don't care if Porsche shows up in Detroit. Porsche is German and its identity rests in everything German including its arrogance and lofty prices.
This kind of brand identity is no different for the Italians or the English. If you are a fan of Ferrari or Maserati, certain Italian qualities inure to these vehicles that transcend an obligatory appearance in Detroit. If you are a Ferrari fan, you have one on order from your local dealer. You don't need to see it in Detroit to be persuaded to buy it.
And now that Aston Martin has been dumped by Ford, I wonder if its new management team will be as willing to write the check to appear in Cobo Hall when what really matters in the US is the Los Angeles, California market and inclusion in the most recent Hollywood installment of James Bond.
California is the sixth largest economy in the world on a stand-alone basis. Maybe it's high time we were treated like a large "country"!
Porsche will get the same amount of press from the US magazines and automotive journalists because they all cover the same events all over the world. Porsche's absence from Detroit will be something for the Detroit-centric automotive journalist to pout over; but I doubt it will effect Porsche sales in any way either in the US or the other world markets. And no car magazine is going to shun Porsche products (or its ad dollars).
Do you think that Porsche isn't going to throw the keys of the new GT Panamera to Dan Neil of the LA Times? Of course Dan will get to review any new Porsche because so many units will be sold here in LA. And what US-based car magazine isn't going to give a 
cover to any new Porsche and compare it to an Aston Martin, BMW, Maserati or Mercedes?
Even GM has signaled the importance of emerging markets by showing some amazing products in China. The really cool Cadillac SLS (see "Cadillac Gets it Right -- in China?" Issue 154, 30 November 2006) and the Concept Buick Riviera were Chinese debuts. BMW, an archrival of Porsche, showed its gorgeous Concept CS in Shanghai. The CS is a "four door coupe" aimed directly at the Porsche GT Panamera, Aston Martin Rapide and Mercedes-Benz CLS.
I don't know if the Detroit Auto Show is in danger of becoming just another consumer auto show where the great unwashe
d masses go to see cars they will never own. I think not; however, when it comes to high-end niche market vehicles like Porsche, the "need" to represent in Detroit is diminished. The US is a just a big marketplace -- nothing more and nothing less. With the decline of GM, Ford and Chrysler's influence in their home market, the intense speed of globalization and mass information distribution on the internet, the other world stages provide sufficient opportunities for smaller manufactures to shine bright -- and create sales buzz -- no matter where the show is located.
