Porsche eyes cooperation with Chinese technology giants

Christoph Rauwald
Bloomberg News

Porsche AG is exploring joint projects with Chinese technology giants including Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Baidu Inc. to expand digital offerings in its largest market and bolster sales.

Country-specific features for voice recognition, navigation and integration of the ubiquitous WeChat messaging service will be developed locally, Porsche Chief Executive Officer Oliver Blume said in an interview in Shanghai this week. The manufacturer also signed an agreement to expand its research cooperation with Tongji University on Wednesday.

“We want to have the right partnerships in place in each individual region,” Blume said. “It’s a misconception to believe all this can be developed in Germany.”

The move builds on efforts by Volkswagen AG’s most profitable brand to cater to the Chinese, who overwhelmingly use Alibaba-backed AutoNavi and Tencent’s WeChat instead of Google Maps and Whatsapp.

China’s emergence as the world’s largest electric-car market also gives it a key role for Porsche’s plan to boost its lineup of fully and partly battery-powered vehicles. The company’s first all-electric model, the Taycan, is due to come out later this year and will be followed by a more spacious Cross Turismo version.

Other China-specific features in the works include interior illumination or softer suspension to meet local tastes. But despite the country’s growing importance, Porsche seeks to maintain a balanced global sales footprint to avoid becoming too dependent on one market, Blume said. North America, China and Europe currently each account for roughly a third of global deliveries.

The Stuttgart, Germany-based manufacturer faced a bumpy start to the year as worldwide sales fell 12 percent in the first quarter, triggered by production bottlenecks in the wake of more complex emissions tests in Europe, the brand’s decision to cull diesel engines and model changeovers.

Still, Porsche expects full-year sales to rise to a record this year, even as the economic outlook weakens in some key markets. The luxury brand is particularly exposed to trade tariffs as it produces all its vehicles in Europe. But it has more leeway to adjust prices for its well-heeled buyers than mass-market manufacturers.

Porsche predicts a slight rise in revenue this year, helped by the introduction of the latest iteration of its iconic 911 sports car. The 911 shaped the brand’s cachet for decades and has a loyal fan base in the U.S. and Europe.

Customers in China have mainly opted for its Macan and Cayenne SUVs, but Porsche’s efforts to promote its sports cars in China, including building a race track outside Shanghai, are making “steady progress,” Blume said. The country has become the biggest sales region for the two-seater 718 Boxster and Cayman, he said, which are less expensive than the 911.