Author: Yu Yan
Editor: Zhou Zhiyu
The failure of electrification transformation made Porsche's allies uneasy.
After the dealer partner of Porsche China "forced the court", another shareholder of Porsche asked the CEO of Porsche, Oliver Bloom, why he insisted on the goal of more than half of the sales of electric vehicles next year. DWS Investment GmbH, one of the main institutional shareholders of Porsche, even said that the downturn in the share price was, to some extent, a reflection of the governance deficiencies of Porsche.
No wonder investors are worried. Since this year, Porsche's share price has continued to decline, down 14.4% from the beginning of the year, while Ferrari's share price has risen 23.52% over the same period. Even Porsche's share price broke directly recently, reaching the lowest point since its listing - 69.2 euros per share, and still hovering around 70 euros per share. Compared with the peak in May last year, it also dropped by 41%.
Investors believe that because of the slowdown in the global electric vehicle market, the sales of Porsche electric vehicles are not high, which has threatened the company's sales and profits. Therefore, some Porsche shareholders called on the luxury car manufacturer to slow down its electrification offensive.
The main reason for this appeal is that when Porsche reformed its product line, its sales in China, the main market of electric vehicles, were poor, prices fell, and parts procurement problems also occurred, putting pressure on Porsche's share price. Bloom also described the situation of Porsche in the Chinese market as "difficult".
Since 2022, Porsche's sales in China have declined for two consecutive years, which is in sharp contrast to the price increase in the past few years. Especially since 2023, the decline has further expanded, and the annual sales volume has dropped by 15%.
According to the financial report for the first quarter of this year, the situation in the Chinese market is more severe. In the first quarter, Porsche sold 16340 cars in China, down nearly 25% year on year.
When the sales volume is not guaranteed, price reduction becomes an inevitable path, and damage to brand value is inevitable.
In May, some dealers offered a price of more than 440000 yuan for the Taycan model, and some analysts teased that "the Taycan depreciated faster than the 911 sports car".
In the Chinese market, dealers have to cut prices to subsidize consumers in order to promote sales in the face of heavy sales pressure; In order to complete the sales task, Porsche China also chose to let dealers hold down the stock, which further increased the financial pressure of dealers, so it chose to take the initiative to "force" Porsche.
Porsche responded: "At present, the automotive industry is undergoing unprecedented major changes. Porsche China and dealers are facing a number of complex problems, opportunities and challenges coexist."
A series of chain reactions are taking place at the same time with the decline of sales. The sales volume in the first quarter was 8.1 billion euros, down 12.7% year on year; The gross profit margin of auto business was 23.4%, down 30.3% compared with the same period last year.
Luxury brands have always been proud of their high profit margin and high price brand image. Now, Porsche is stepping down from the altar.
Previously, Porsche electrification was seen as a new growth curve. However, the current sluggish demand for electric vehicles proves that the next challenge is obviously greater than the opportunity. Ingo Speich of Deka Investment, an investment company, said that in the face of Porsche's electric car, "consumers are more likely to boycott it than buy it."
In the wave of electrification, these traditional luxury brands once made radical statements in the aspect of electrification, which won them good achievements in the capital market. When Porsche went public in 2022, electrification was an important narrative in the capital market. At that time, as the largest IPO in Europe in recent years, its market value once exceeded BMW and Mercedes Benz.
In 2023, Porsche said that by 2025, its pure electric and plug-in hybrid models will account for more than 50% of the new cars sold. In 2030, Porsche will strive to make pure electric vehicles account for more than 80% of new vehicle deliveries.
Also because of a series of radical plans, Porsche's share price was close to 120 euros in May 2023, an increase of nearly 50% compared with the time of listing, and the capital market was excited about it.
In the past year, Porsche's electrification process is still radical. This year, the electrification of several representative models has been further planned, and its iconic 911 model has also been equipped with an ultra lightweight high-performance hybrid system. Normally, Porsche should continue its previous glory.
However, from the current sales volume, electrification cannot continue to protect Porsche. One obvious data is that the delivery volume of the flagship model, the electric Taycan, almost halved in the first quarter.
In the current Chinese market, many international luxury brands are facing a situation where brand value and sales are difficult to maintain. Electrification was once the "lifeline" for them to seek growth. But now, electrification has become a boomerang. The strategic adjustment that hit these brands has also frustrated them in the capital market.
These traditional car enterprises also need to make their own choices on how to balance finance on the road of electrification transformation.
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