The scale strategy failed, and discounts and promotions reversed the decline. How far is Porsche from Jaguar Land Rover?

Recently, some netizens found that the price of Porsche in the Chinese market has continued to fall. Not only mainstream models such as Macan and Taycan are discounted, but even classic sports cars such as 911 are discounted, with the highest discount reaching 300,000 yuan. This phenomenon has attracted the attention and discussion of industry insiders and consumers.

Why does Porsche want to cut prices? Can price cuts increase sales? Will price cuts affect the brand image? After the price reduction, can the middle class become its new consumer group?

91che believes that Porsche's price cuts and promotions in the Chinese market are a helpless move, and a compromise made to maintain sales and market share against the backdrop of economic downturn, intensified competition, and the failure of scale strategy.

However, this strategy is unlikely to achieve the desired effect and may instead lead to a significant decline in brand premium and brand power.

First of all, Porsche's price cuts are a choice forced by the economic downturn and intensified competition. In recent years, China's economic growth has slowed down, consumer confidence has declined, and the luxury car market has also been hit. According to data released by the China Association of Automobile Manufacturers, China's luxury car market sales fell 3.2% year-on-year in 2022 and 5.6% year-on-year in the first three quarters of 2023.

Under such circumstances, the super luxury brands at the top of the luxury car pyramid are also hard to stay out of trouble. Moreover, in the super luxury market, Porsche is also facing fierce competition from brands such as Bentley, Lamborghini, and Ferrari. Although these brands do not have the pressure of scale, they have strong advantages in product strength, technology, and service.

Therefore, in such a market environment with fierce competition, shrinking demand and picky consumers, Porsche has to attract more consumers by lowering prices.

Secondly, Porsche's price cuts and promotions did not increase sales, but instead led to a sharp decline in brand premium and brand power. According to official data released by Porsche China, Porsche's sales in the Chinese market in 2022 were 86,000 vehicles, a year-on-year decline of 2.5%. This is also the first decline since Porsche entered the Chinese market.

In 2023, this trend is increasing. Porsche's deliveries in the Chinese market in the first three quarters were 21,400, 22,500 and 16,900 vehicles, with year-on-year growth rates of 21%, -2% and -40%, respectively. From January to September this year, China became the only market in which Porsche experienced a decline, down 12% year-on-year.

These data show that Porsche's price reduction strategy has not attracted enough consumers, but has disappointed and dissatisfied existing consumers. Because for super luxury brands, price is not only a cost, but also a symbol of identity and status.

If a super luxury brand starts discounting and promotion, it means that it has begun to decline, and it is difficult to reverse. This will damage the brand's image and reputation, and reduce the brand's premium ability and loyalty.

Finally, Porsche's price cuts and promotions are the result of the failure of its scale strategy, and are also the helpless continuation of its scale strategy. Porsche has been taking the scale route in recent years, hoping to sell more cars. Starting with the Cayenne, and then to the Macan and Panamera, they are all built based on the idea of ​​scale.

These models greatly boosted Porsche's sales, making it the most powerful brand in the ultra-luxury market. However, in the economic downturn, as the wealthy are more cautious about spending, Porsche's scale strategy has become a hindrance, because the already expanded production capacity and dealer network cannot be reduced.

It is worth noting that Porsche has now been independently listed and needs good financial statements to explain to shareholders and investors. Porsche, which has no way back on the road to scale, can only continue to find ways to increase sales, even at the cost of price cuts.

To sum up, 91che believes that Porsche’s price cuts and promotions in the Chinese market are a helpless move. It is a compromise made to maintain sales and market share against the backdrop of economic downturn, intensified competition, and failure of scale strategy.

But this strategy is unlikely to achieve the desired effect. In the future, Porsche may face more challenges and difficulties and need to reposition its target customers and product strategies. Porsche's frequent price cuts and promotions may be due to its hope that the middle class will become its new target customer group.

In the current market environment, the middle class is a large and potential consumer group. They have a higher income level, stronger spending power, a broader consumer vision, and higher consumer demand. They pay attention not only to the price and performance of automobile products, but also to the quality and experience.

They have a yearning and pursuit for super luxury brands, but are unwilling to give up other enjoyments for a high price. Therefore, if Porsche can maintain the quality and experience of its products and improve its services and after-sales service while reducing prices, it is possible to attract these middle-class consumers and make them new loyal customers of Porsche.

Of course, this also requires Porsche to make some adjustments to its product strategy, such as launching models that are more in line with the needs and preferences of the Chinese market, paying more attention to innovations in intelligence, environmental protection, personalization, etc., and emphasizing the brand's culture and tone, so that consumers can feel the unique charm of Porsche.

In short, Porsche's price cuts in the Chinese market are a helpless move, a compromise made to maintain sales and market share in the context of economic downturn, intensified competition, and the failure of the scale strategy. As for whether this strategy will succeed, whether Porsche can sink to become the new car of the middle class like Jaguar Land Rover, which has 30% off the Tiger and 60% off the Leopard, is still unknown.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.