Stuttgart - Porsche is shifting its focus beyond
horsepower and handling to services like finding nearby parking spots and
providing real-time weather data that warn drivers of icy roads.
The goal is for so-called digital services to generate at
least 10 percent of annual revenue in the medium term, the Stuttgart,
Germany-based luxury division of Volkswagen said Friday. That effectively means
that a $89 400 911 sports car would generate at least $9 000 from offerings
like activating special lighting systems to help navigate mountain roads.
“Customer expectations are changing,” CFO Lutz Meschke
said at a press conference. “They are demanding personalised services that are
tailored to them.”
Porsche founded a unit in Ludwigsburg, Germany, last year
focused on creating digital services for cars like the 911, four-door
Panamera coupe and Cayenne sport utility vehicle. It also opened a technology
lab for developers in Berlin and acquired stakes in venture-capital fund
e.ventures and parking-service provider Evopark. The carmaker already offers
the Porsche Connect mobile application, with features including navigation,
real-time traffic data and remote vehicle monitoring.
“While the focus of our research and development
investment has until now been almost exclusively on developing vehicles, we
will spend significantly more on creating new digital services in the future,”
Meschke said near the sports-car maker’s headquarters in Stuttgart. The company
will be “forced” to generate much more in sales from the services as the
industry adapts to new technology, including autonomous driving.
Record 2016
Porsche’s success is vital for Volkswagen to stem the
financial fallout of its diesel-emissions scandal and generate the funds needed
for the industry’s shift to an era of electric robo-taxis. The brand posted
record earnings, revenue and deliveries in 2016, and operating profit amounted
to 17.4 percent of sales, among the highest in the auto industry.
Porsche forecast Friday that vehicle sales and revenue
will rise slightly in 2017. As long as currencies remain stable, operating
profit will about match the last year’s figure as spending on new technology
holds back earnings growth.
As part of a push to expand its model range, the brand
unveiled a station wagon version of the updated Panamera this month, along with
the GT3 racing variant of the 911. It’s also considering coming out with a
coupe-like version of the Cayenne. Development of its first all-electric sports
car is “proceeding fully in line” with the planned rollout in 2019, Chief
Executive Officer Oliver Blume told journalists.
To free up funds for new technology, Porsche plans to cut
production costs per vehicle by 15 percent, Blume said. Through closer
cooperation with Volkswagen’s Bentley and Bugatti luxury divisions, the
automaker expects to reap cost savings of 100 million euros ($107 million) a
year as of 2018. Porsche’s factory in Leipzig, Germany, is preparing to build
chassis for Bentley’s Continental model, which shares underpinnings with the
Panamera, and could add production for other models as well.
Hiring plans
The new division in Ludwigsburg currently has about 100
employees, and that will rise to as many as 500 as it adds outlets in Asia,
Israel and Silicon Valley, Meschke said. Digital products will account for a
“significant double-digit” percentage of Porsche’s revenue, he said, declining
to specify a figure. In January, the CFO estimated the operations could
generate 30 percent of sales in seven years. They’re likely to account for 10
percent of Porsche’s research and development spending over time, he said
Friday.
“It is not always necessary to have the resources
ourselves” to develop the services, Meschke said. “In this respect, it is
possible we will invest in startups or established external partners, or seek
to cooperate with them.”