The U.S. auto industry is trapped in a death spiral due to its dependence on retail incentives, warns Peter Schwarzenbauer, president and CEO of Porsche Cars North America Inc.
Auto makers must honor the basic business model of supply and demand to ensure long-term growth and profitability, he says.
“Our biggest concern, besides the general economic situation, is always — from our point of view — this stupid incentive war,” he tells Ward's in an exclusive interview. “This is destroying the car market in general.
“Unless we see major changes here, philosophical changes, this will be damaging for all of us.”
Schwarzenbauer's remarks come after Porsche suffered an August sales decline of 12.5%, compared with year-ago. His position is reflected in Porsche's no-incentives policy.
The auto maker has spurned the sales technique steadfastly. The one exception: U.S. Porsche Car Club members in 2002 were offered a $1,000 discount on '02 Boxsters.
The measure, intended to clear out inventory in preparation for the '03-model rollout, will not happen again, Schwarzenbauer vows.
“We are much closer now with the dealer body,” he says. “So if we would see that dealer stock is getting too high…from now to January-February next year, we would react on the production side right now.”