Since March, Porsche cars have been available in Germany on subscription via the Cluno service. Florian Rothfuss of Porsche Digital explains in an interview why the car manufacturer has not set up its own platform, and what limits it sees for alternative distribution models.
Florian Rothfuss, your “Porsche Drive” service, launched a few years back, already offers Porsche cars for hire on a per-day or per-week basis. You’ve now joined forces with the startup Cluno on a subscription-based model. Is this how cars will be distributed going forward?
Our core business is still selling cars. But by collaborating with start-ups like
Cluno, we can test new distribution models and reach customers who do drive a car but do not want the long-term commitment of buying or leasing. Subscription customers can hire a Porsche on monthly fixed-rate subscription using a phone app. After six months, they can switch to a different model of vehicle – whatever best suits their needs. We are keen to gain experience with these customer groups. Who are they? How do they actually use their subscription cars? We also want to find out how we can ultimately turn this group of users into purchasers.
Why go with the Cluno subscription model? You could have partnered with one of the numerous car-sharing providers to trial new use and mobility models.
No, that’s something different.
Porsche won’t do carsharing. You won’t simply be able to pick up one of our cars from the roadside – either now or in the future. These services are too cheap, and frankly, the barriers to entry are too low. That isn’t a good fit for our brand. With the Cluno model, customers subscribe to a Porsche for at least a few months. The model is designed to appeal to people who want to use a car flexibly but exclusively. The subscription model makes this flexible use possible.
Through Cluno, we are reaching people who may never have thought about having their own Porsche.
You operate your own in-house subscription platform in the USA with “ Porsche Passport ”. Porsche’s parent company VW already offers its own subscriptions. So why now partner with Cluno instead of setting up your own model for the German market or going in with VW?
We see the cooperation with Cluno as a test run, a pilot project. It’s also about working with external providers and gaining experience with their working methods and target group. We decided in December that we wanted to enter the subscription market. By March, the project was already live. Without Cluno it wouldn’t have been as fast. Making a subscription service like this work involves more than creating the digital platform. Just think of everything that goes on behind the scenes: customer service, logistics, contract management, financing and much more. The Cluno subscription offers customers a great deal of flexibility. Conversely, it also means more work for the provider.
But by arranging the subscription services for Porsche, Cluno will have the direct contact with customers. Do you see any danger that customer relationships will suffer?
We have the confidence to accept this. A Porsche is an exclusive vehicle. We are convinced we will gain new customers without losing those we already have. Through Cluno, we are reaching people who may never have thought about having their own Porsche. Once they have experienced a Porsche, and with easier access through digital technology such as the Cluno app, this could change.
The car manufacturer Cadillac recently withdrew its own subscription model. And Cluno’s CEO, Nico Poletti, told Handelsblatt that he doesn’t see the automakers’ own subscription services as a threat to his business, because customers appreciate the freedom to switch flexibly between different makes of vehicle. As a manufacturer, aren’t you surrendering too much market power?
Ultimately, it’s the customer who decides who offers the best service. We have a good partnership with Cluno. Both parties see the advantages, and the question of power does not arise. It is of course important for us as a manufacturer not to lose contact with our customers. From my point of view, one factor is decisive: if the vehicle is used for a long period, an inflexible solution will always work out cheaper for customers. If they are truly happy with a vehicle and plan to be using it long-term, they will always choose to lease or buy. We remain the point of contact for these customers. And let’s not forget that the partnership is a pilot project for us. We keep very close track of outcomes, and regularly revisit the question whether the collaboration is helping us to achieve our goals.
The Cluno subscription offers customers a great deal of flexibility
What’s your take on the project, after its first couple of months?
We are highly satisfied so far, both with the number and types of vehicles booked. There’s a demand for the entire range, from the lowest-priced models Boxster and Cayman for 1299 Euros per month, to the Panamera for 1999 Euros. Cluno subscriptions have a minimum term of six months, so we haven’t yet got any of the cars back. We’ll have to wait and see how it pans out. When will the vehicles be returned? In what condition? What mileage will there be on the clock? We assume there will be significantly less wear and tear than with hire cars. People have the vehicle in their possession for six months. It will certainly spend some of this time parked, and will perhaps be treated better than a short-term rental car. After all, we then have to sell the cars afterwards.
Your dealers will take care of that. What do they think of the subscription model – which competes with the classic distribution channel? How many Porsche dealerships can we expect to exist in a future with alternative, digital distribution models?
To make one thig clear: the impetus for this development is not coming from the automaker. Customers are demanding the ability to get cars through digital channels, and we have to respond. The question is: do we take the dealers along with us on the journey – and how can we make it work? For Porsche, the dealer network is a strong asset, even though it is of course geared specifically to sales and leasing. Car hire and subscription models won’t make dealerships superfluous. The cars we are bringing on the market through Cluno are not new. They are all pre-owned vehicles, checked by our dealers and then sold to Cluno. When the Cluno contracts expire, the car dealers can buy the vehicles back. The dealers also take care of services such as tyre changes.
The Cluno subscription includes 15,000 free kilometres. Above this threshold, customers pay 60 cents per kilometre. Pretty expensive, isn’t it?
These subscription models are quite simply challenging to cost. When customers enjoy such flexibility in vehicle use, it’s a risk for us. And this comes with a price attached. We’ve put together a reasonably-priced service with Cluno, but this is only possible if we place limits on the degree of flexibility – through the minimum term, for example, or the mileage. This is a good way for new customer groups to get to know and appreciate Porsche. And as for the drivers who want more of a Porsche experience over a longer term, I can still only advise them to buy or lease.