SALZBURG, Austria - Porsche Holding GmbH, the Salzburg-based auto distribution giant, is the main source of the Porsche and Piech family fortune. The business is run separately from carmaker Porsche AG. Little-known Porsche Holding is the largest car dealer and largest non-manufacturer owned distributor in Europe.
It distributes all Volkswagen group brands and Porsche cars in Austria, Hungary, Slovenia, Slovakia and Romania, and through a joint venture in Croatia. Through Porsche Inter Auto, it is also a retailer in all those countries and owns half of French dealer group PGA Motors, which represents Peugeot, Citroen, VW, Audi, Opel, Mercedes, BMW, Mitsubishi and Rover.
Porsche Holding sold 202,122 new cars and light trucks across Europe in the fiscal year to March 31. It reported a profit of $138 million on revenue of $4.4 billion during the year. Both figures will grow this year. Meanwhile, revenues and profits from financial operations Porsche Bank and Porsche Insurance Services are rising even faster.
Four managers of equal standing make up Porsche Holding's management board. Automotive News Europe reporter Georg Auer interviewed two of them: Speaker of the Board Kurt Walbert and Wolf-Dieter Hellmaier, the board member for distribution.
How are sales in your central and eastern European markets?
Hellmaier: We will sell around 60,000 new cars in these markets this year - including Croatia - compared with 47,000 last year.
In Austria, we expect 110,000 new-car and light-truck sales. Altogether we will distribute about 170,000 new cars and light trucks from the VW group.
What is the secret of your success?
Hellmaier: The attention we pay to our used-car prices is one. The customer has to get a good price for his VW trade-in. When buying a new car, the differential he has to pay - not the price - is decisive.
We also derive important synergies from our finance division, Porsche Bank. We are constantly optimizing our logistics. But we will not unify marketing. Every market has its peculiarities that you have to watch and care for.
Is the success of Porsche Holding based only on the good fortune of having Volkswagen group products to distribute?
Hellmaier: We are successful because we use this opportunity to best effect and because we can offer an enormous amount of new models and new brands.
What is the sales trend in your markets?
Walbert: Practically everywhere the signals point upward. In Austria, it is slight growth from a record market share of 33 percent.
In our central and eastern European markets we see high growth. In France, where we own 50 percent of PGA, our sales are growing with the surge of the market and from newly acquired dealerships.
There we will sell 35,000 to 40,000 new cars this year; 50,000 in two years.
We have talked to PSA President Jean-Martin Folz, who also sees prospects for PGA in other EU countries. Thanks to financial backing by Porsche, PGA has great clout.
For instance, Porsche Inter Auto will join forces with PGA in purchasing tires. We are also sounding out new possibilities for Internet sales support. With the Internet you are present in all of Europe.
What were your results in the first half of 2000?
Walbert: We will surpass last year's revenue comfortably. It might come to $4.8 billion. All our east European markets are growing.
In the past year Porsche Holding sold more than 200,000 new cars. This year it should be 250,000 new cars. In 2002 or 2003 we expect 300,000 new-car sales.
Do you set up your own retail company in every country?
Hellmaier: This is the first thing we do in a new market. There our retail people can learn selling and servicing cars the Porsche way. But wherever we are we say: 'When in Rome, do as the Romans do.'
How do you cut distribution costs?
Hellmaier: We have systemized everything so that the distributor can connect to his manufacturers by pressing a button.
We get great synergies from the Porsche Holdings Parts Center in Salzburg. It serves all our European dealers, even at the most distant spot in eastern Europe, in 12 to 48 hours.
Does every market get the same treatment?
Hellmaier: No. Take Romania, a small market selling 3,000 VW vehicles. We have smaller, custom modules for those cases. They share the delivery center with adjoining Hungary. We are flexible. Totally centralized business would mean no business after a very short time.
Do you treat the Porsche-owned retailers and private retailers the same?
Hellmaier: Yes, we see these Porsche-owned retailers as examples for dealers, their salespeople and mechanics. That is the best way to assure the quality of the dealers and their profitablity. Only profitable dealers have satisfied customers.
Is it necessary to engage in retailing to get to know each market?
Hellmaier: Absolutely. But we employ indigenous managers. It is no good setting up a foreign manager without a feel for the customers and employees. Within two to three years every retailer and distributor can be profitable.
What role is Porsche Bank playing?
Walbert: Porsche Bank is an integral part of all the business. It is of special value in all our new markets. There we finance 30 to 40 percent of the cars we sell. If you cannot offer financing and insurance there, your sales suffer much more than in western Europe.
Do your distributors in different countries use common back office organizations?
Hellmaier: As the distributors act under the name of Porsche, there has to be a corporate identity. But in each country they act as an independent national entity with national management and direct connection to their brand manufacturers.
The Salzburg main office supports them - after start-up - with only a treasurer for each distributor. The treasurer keeps the connections to the Porsche Holding central office.
You don't order cars centrally?
Hellmaier: No. Each country orders what it sees fit.