Porsche says carmakers see tech as key to customer acquisition

(Bloomberg) -- Steve Jobs trained consumers too well, says Kjell Gruner, the new president and chief executive officer of Porsche Cars North America Inc. And now car companies have a lot of catching up to do to match Apple Inc.’s standards for user interface.

“With their ecosystem and their seamless customer experience, they have shaped the customer expectation,” Gruner says of Apple. That has a direct impact on how people feel when they get into—or shop for—a piece of technology as big as a car. “We have to integrate [digital] with the physical experience because we are a very, very physical product. If you don’t have digital experiences, you are not on the radar screen. You’re irrelevant.”

Digital experience includes everything from an electric vehicle turning itself on and instantly syncing with your phone the moment you step inside, to an app that lets you build your own “dream garage” of cars, to being able to download performance-related software directly to the vehicle.

On a private video call on April 21, Gruner spoke admiringly of the instantaneous, seamless nature of Apple’s integration into daily life. The expectation now extends to cars, he says, which makes staying relevant “tricky” for the 90-year-old automaker that cut its teeth producing naturally aspirated, manual, decidedly analog racing machines.

Indeed, when Porsche executives talk about future plans, they typically focus on improvements and upgrades to those heritage-inspired 911s that titillate longtime fans, as well as the heightening luxury in its SUVs, which help expand its market share. For Volkswagen Group’s top-earning brand, that’s long been enough to generate passion among die-hard customers, spurring record sales in recent years for the Stuttgart, Germany-based automaker.

In the first quarter of 2021, Porsche sales were up 36% from a year earlier, to 71,986 units sold globally. The number was pushed mainly by demand in China, its largest market. But while car buyers in China and Europe might happily wait six or nine months for a special color combination or track spec on their new car, Gruner says, Americans expect instant gratification. Phone apps, online configurators, social media, and even video games have made U.S. consumers more discerning and particular than ever about car culture—and what they want for themselves. “They have a certain view of what configuration they want,” he says. “And also, they want it tomorrow.”

Gruner says digital products both inside and outside the car will actuallyenhancethe driving experience for Porsche’s cadre of loyal enthusiasts, including those hesitant to accept new vehicles such as the Taycan and other EVs, which can sometimes seem more like appliances than machines. New digital efforts like Porsche Finder help buyers find new and used Porsches across the country. Porsche ID, which allows users to create a virtual garage of dream cars, like in a video game, works to grab the short attention spans of younger and American buyers.

Meanwhile, the Porsche Drive rental service, which works through a phone app, is already bringing in new buyers, the company says—especially for the Taycan. It plays to the idea that commitment-averse consumers can switch out their car for another at any time. Often users end up settling on one they prefer, according to Porsche.

These tools, which are owned and operated by the brand, work as data collection tools on potential customers. The aim is to track consumers’ digital habits, or “journey,” to help Porsche anticipate what they’ll want to buy—so it knows what to have in stock on the showroom floor. It isn’t happening yet, but it will, Gruner says.

“We have a project called Virtual Build-to-Order where we, with artificial intelligence, try to predict what [clients] will be ordering and try to manufacturer that—bring that already into the pipeline and have that here,” Gruner says. Versions of this idea are used everywhere from fashion malls to grocery stores, though they’re rare in the car world.

So far the revenue from such digital products, as well as finance- and insurance-related apps, is “minimal,” Gruner admits. But he predicts they’ll ultimately influence and impact “100%” of the business.

Digital emphasis in an actual Porsche vehicle is currently most apparent in the new Taycan, the $80,000 electric sedan that’s the essential prime mover in the automaker’ s€1 billion($1.2 billion) shift to EVs and carbon neutrality.

With its curved driver display and expansive passenger touchscreen totaling 53 inches of unadulterated screen time, plus real-time traffic updates and charging-station mapping, the Taycan is programmed to make smartphone-groomed consumers salivate.

But it’s not quite as fast as a phone. From complete “off” position, the vehicle takes several moments to “wake”—which is why it stays on even when the car is parked and the owner steps away. It turns fully off only when the owner pushes a button on the key fob to “lock” it. Otherwise, it always sits silently “on,” which can drain the battery.

It’s a solution that Gruner says is “not at all” perfect but gets Porsche one step closer to smartphone levels of connectivity. And it can be disconcerting to get out of the car and just walk away, without turning an ignition key or pushing a power button. It helps to have a salesperson there to assure you it’s OK.

“With [the iPhone], startup time is zero—that’s what customers are used to,” Gruner says. “But that is because the phone is always on. If you lock a car, that is like turning off your iPhone. And when was the last time you really turned off your iPhone? Customers are turning on the car, and they expect [claps] it is all there—navigation, whatever. But we have to live with it,” he says. “That customer expectation is coming from those [Apple] devices, like it or not.”

Still, so far, so good: In the first quarter, Porsche delivered 9,072 Taycans worldwide. The number trailed sales of the long-running 911 by just 61 units.