Getting back on track: fresh out of the starting block, Porsche Latin America hopes to triple sales of the legendary German autos within three years

Latin CEO: Executive Strategies for the Americas, Dec, 2000 by Rochelle Broder-Singer

EVERY YEAR, MEMBERS OF the Chilean and Argentine Porsche clubs pack a lunch, ill their gas tanks and roar through the Andes to the mountain city of Mendoza. There, they spend the weekend celebrating their sports cars--revving their powerful engines, comparing instrument panels, caressing them with chamois. In neighboring Brazil, similar Porsche events draw 800 people four times a year.

Few cars--in fact, few brands--inspire people like the Porsche. The mystique of the German sports car is undeniable. Yet, despite the vehicle's aura and the driving experience it delivers, Porsche sold only 250 cars in Latin America in the 2000 model year (which ended in July), a decline from about 350 cars sold in 1999. In 1995, Porsche sold 160 vehicles in the region.

The man charged with getting sales back on the growth track is Thomas Startzel, formerly the company's manager for oversees markets, whose first step as president of the newly established Latin America subsidiary was to open its headquarters in Miami.

Even though sales in the region accounted for just half of one percent of Porsche's worldwide unit sales last year (Porsche sold 48,000 vehicles in the last model year), Latin America factors prominently in the company's plans. Porsche wants to be seen as an international brand, and having a presence in Latin America is part of that goal. "Porsche doesn't just look at this as a profit thing or an economic thing," Startzel says. "Latin America fulfills its worldwide mission."

Startzel expects to sell 400 cars in the 2001 model year, and he says the company already has orders for more than 120 vehicles. The new Cayenne sport utility vehicle (SUV), set to hit the market in 2002, should contribute to an increase in the following year. By the 2003 model year, Startzel predicts, sales of Porsche vehicles in Latin America will jump to more than 800.

Analysts are a bit more skeptical. "Growth will be sluggish, because it depends basically on the performance of economics and the increase of buying power" says automotive journalist and analyst Fernando Calmon of Assessotec Ltda.

Although Startzel attributes the 2000 decline to economic doldrums, he says changes in Porsche's supply network and sales strategy should go a long way toward addressing the company's problems in Latin America. Before opening the Miami subsidiary, Startzel expanded from just three importers in Latin America to 14. With the inception of Porsche Latin America's six-person office in Miami, we can support our importers much more than in the past," Startzel says. Supporting importers is the most important thing Porsche can do, Calmon says. This includes supplying inventory, visiting often and helping with marketing, the later of which is often too expensive for local importers--and for the dealers they supply--to do alone.

Porsche has already given its dealers a boost with new models to sell, adding the recent Turbo to the Boxster and 911 lineup. Startzel says the new option has already boosted sales, and he expects even more sizzle from the announced Cayenne. "The dealers see a future in Porsche," Startzel says. "And that's why they invest in showrooms."

Showrooms are key The company does very little advertising, relying instead on the vehicle itself, plus word-of-mouth. "I think the product is what really speaks the strongest language," says Startzel. In keeping with that strategy, Porsche Latin America has stepped up regional Porsche Festivals and the Porsche World Road Show Calmon agrees: "Porsche Clubs are the best instrument to spread the Porsche [brand]. They should be supported even more... . It has achieved such a success that competitors like Ferrari are following the same steps."

Startzel himself attends nearly all of these events, which include press conferences, appearances by famous race-car drivers, displays of vintage and history-making Porsches, test drives, driving schools and road rallies. Startzel also visits with his. importers at least once every two months, far more than when he was based in Stuttgart, Gennany.

Porsche is already a successful company without the Latin American business. Its 11.3 percent return on sales is the best in the automotive industry and customer satisfaction runs high. But Startzel recognizes that Latin America presents almost virgin territory, a real opportunity to develop a new market with plenty of potential customers, both for new vehicles and for after-market products and services. He says a marketing survey in Brazil identified 2,500 potential customers in that country.

Porsche's biggest market in Latin America last year was Puerto Rico, where the company sold 120 cars, almost half of total sales in the region. Although Startzel says the company underperformed in Mexico, small countries surprised him. Last year, for instance, Porsche sold 40 cars in the Dominican Republic. And though tariffs make Porsches more expensive in Latin America than in the US, Latin American customers have tended to buy the pricier Turbo and 911 (with a US price upwards of US$80,000), rather than the Boxster (with a US$45,000 price tag).