Porsche refines dealer network amid market shifts

German sports car manufacturer Porsche is optimizing its dealer network in China, the world's largest automotive market, as shifting consumer preferences and intensified competition reshape the country's car industry.

"By the end of 2026, the number of Porsche Centers in China will be consolidated to approximately 100," said Alexander Pollich, president and CEO of Porsche China.

He emphasized that network optimization is not just shutting down but planning how to utilize its facilities with a downscale setup or to transform them into other formats.

Porsche is taking measures to support its dealer partners during this period of transformation, including financial relief through a central storage program to ease cash flow pressures, as well as trade-in and wholesale support.

"Our key purpose out of optimization is to improve the overall network profitability, resulting in a multi-win situation (among Porsche, dealers and customers)," said Pollich, who came to take helm of Porsche's operations in China in September.

The move, first disclosed during Porsche's Q3 investor call by CFO Lutz Meschke, reflects the carmaker's commitment to a "value over volume" strategy and its goal of ensuring long-term profitability for its dealers.

China's auto market is undergoing a period of rapid transformation, with evolving consumer behaviors and intensifying competition.

Statistics show that over the past four years, carmakers had seen more than 8,000 authorized dealerships close.

In the first half of 2024 alone, nearly 2,000 dealerships exited the market, almost matching the total number for 2023.

Porsche expects the automotive market in China to be characterized by intense competition, rapid technological advancements and a significant shift toward electrification and digitalization in 2025.

"We never shy away from competition. Amid the challenges of today's market, we remain confident in the resilience of the market and are steadfast in our commitment to Porsche's core values of sportiness and performance," said Pollich.

He said optimizing the retail network is a pragmatic approach, as Porsche sees a decline in customer demand.

"It is only sensible to adjust the dealer network respectively. It will not only safeguard network profitability but also guarantee the luxurious and exclusive service to our customers," said Pollich.

Porsche's strategy includes phased closures in cities where long-term profitability is unattainable and targeted investments in high-performing regions.

For major metropolises such as Shanghai and Beijing, Porsche is doubling down on its presence.

Recent investments include upgrades to the Porsche Center Shanghai Pudong, reflecting the brand's confidence in these markets.

It is also expanding its retail formats and digital capabilities to meet the demand of tech-savvy Chinese car buyers.

One of the flagship initiatives is the "Destination Porsche" concept, which reimagines the traditional dealership as a luxurious, experiential hub.

By the end of 2024, Porsche plans to roll out this concept across 35 percent of its network, up from 20 percent in 2022.

In addition to physical enhancements, Porsche is integrating digital touchpoints to strengthen its omnichannel presence.

The "Track Your Dream" feature, accessible via the Porsche app and WeChat mini program, allows customers to monitor their vehicle production and delivery in real-time.

Meanwhile, the carmaker is developing digital solutions tailored to Chinese consumers, such as localized ecosystems and platforms.

Last week, Porsche China announced that its Technical Division will expand to include local procurement and quality assurance activities. It will operate under the name "China One R&D".

This step aims to align the sports car manufacturer's products and services even more closely with the needs of Chinese customers, it said.

The company is also keeping a close eye on innovation trends in China, investing in promising startups and collaborating with local partners.

These efforts feed back into Porsche's global R&D capabilities, creating a two-way exchange of insights and technologies.

"For Porsche, we believe that challenging times nurture opportunities," said Pollich.

By prioritizing quality over quantity, Porsche aims to strengthen its market position and enhance its appeal to discerning Chinese consumers, a move that may even benefit its global operations.

Pollich said China serves as a gym for global trends — developments here often foreshadow what will happen in Europe and the rest of the world.

"This is why China holds such an important role for Porsche, prompting us to strengthen R&D and digital capabilities in Shanghai.

"Being at the forefront of Chinese market dynamics allows us to stay closely attuned to the needs and preferences of our Chinese customers," he said.