14 October 2010

Porsche in China

I had the opportunity to test drive a Porsche the other day with a friend of mine who is buying one.  We went over to the dealership near People's Square.  I always thought you had to show up in a fancy car and act like a big shot to be able to test drive a Porsche, but it was actually remarkably easy.  The salesman was a nice guy from Shandong province and all I had to do was give him my driver's license and cell phone number and we were on our way.


The showroom was filled with some interesting characters.  The predominant type was very young Chinese girls in designer heels not fit for driving checking out Boxsters and Cayennes while their significantly older boyfriends talked to the salesmen about prices while chain smoking Chung Hwa cigarettes (the brand of choice among the wealthy business/government set).  One girl had an LV bag that was so big I don't think it would have fit in a Porsche.  Then there was the young guy probably not yet 30, wearing gym shorts, a t-shirt, and flip flops, signing the papers on a new 911, paid for in cash.

The level of conspicuous consumption here makes New York City absolutely pale in comparison.

Finally we headed down to the car park below the dealership, where there were about ten Porsches of varying specs.  We got up to street level and it was raining pretty hard.  Finally driving now.  Ripping down People's Avenue (人民大道), with People's Square and People's Park flying by my windows on either side, in the pouring rain, in a bright yellow 911 Carrera 4S was pretty awesome.  The sales guy was on his cell phone the whole time chatting with his girlfriend, and seemed not to care or notice that we were doing 150km/h down the crowded city streets.  I went for a second loop.

Later I asked the salesman how business was at the dealership.  He said he personally sells about 15 cars per month, but that the top salesman sells 30 per month.  There were about 15 salesmen on the floor that day.  That's about 250 Porsches moving out the door every month, and it's only one of several dealerships in Shanghai.  Recession?

No wonder Porsche cited the Chinese market as the driving force behind their decision to produce a full size 4-door sedan, angering some diehard customers.  The Chinese business men who buy luxury cars here rarely drive themselves; it's cheap and convenient to have a driver.  So Porsche needed a car with a real back seat to compete.  Hence the new Panamera.

The really shocking thing about the brisk business at the Porsche dealership is the prices, which are astronomical compared to the (already expensive) cost of a Porsche in the USA.  For example, the above car, a 911 Turbo, retails for $135,000 in the US, maybe $150,000 with options.  Now check out the price in China:


That's RMB2,783,500 or about $420,000.  So the same exact car is about 3 times more expensive in China than in the USA.  Why?  Mainly it's because of stiff import duty of more than 100% on luxury goods, plus an array of other taxes.  The high price sure doesn't seem to be deterring Chinese consumers.  The salesman told me that most models have waiting lists of about 6 months.

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