Porsche to offer new entry-level subscription tier in U.S.

ATLANTA — Porsche is making its vehicle subscription program more accessible with a new entry-level tier. The sports car maker will also expand the service to Los Angeles — the epicenter of luxury car sales.

"For the metropolitan area in L.A., this is a perfect way to engage certain target groups with the brand," Porsche Cars North America CEO Klaus Zellmer said last week. "If California were a country, it would be our fifth-largest market in the world."

The Porsche Drive subscription program, launched in 2017 in Atlanta, starts at $2,100 a month (before taxes and a $595 activation fee) and offers unlimited vehicle swaps. Since then, the program has been expanded to San Diego, Las Vegas, Phoenix and Toronto.

Starting Sept. 25, the new subscription level will offer access to a single Porsche model for one or three months. It starts at $1,500 per month for the Porsche Macan crossover and tops out at $2,600 for the Porsche 911 Carrera.

Adding a single-vehicle option acknowledges a preference among some subscription members to stay in one vehicle instead of constantly swapping models.

"We are trying to be as customer-centric as possible," Zellmer said.

The single-vehicle subscription, priced between a typical lease rate and the multivehicle subscription, will also make Porsche vehicles more financially accessible.

"You will be able to reach a target group that is potentially more price-sensitive, and it's bigger," Zellmer said.

Automakers have had mixed success with vehicle subscriptions. Some programs have struggled to attract enough people who want to pay for the convenience. Others have found customers but struggled to turn a profit.

Mercedes-Benz USA said it will end its two-year vehicle subscription pilot this month, citing lackluster demand. The service drew a few hundred customers, and Mercedes executives had expected it to turn a profit in the first 12 to 18 months.

"If the demand would have been unbelievable, then it could have gone further," Mercedes sales chief Adam Chamberlain told Automotive News in June. "But demand was just OK."

Book by Cadillac, a subscription service from General Motors, was put on hiatus in 2018 after few customers bit at the service's $1,800-per-month price. GM now is taking another crack at the program, testing a rebooted version in a dealer pilot.

Ford Motor walked away from its vehicle subscription business last fall, following lackluster demand.

The subscription program is "strategically really important" for Porsche as it looks to develop the next generation of customers, Zellmer said. Four out of 5 Porsche Drive customers are new to the brand, and subscription customers are eight years younger than the average Porsche customer.

"Younger generations are not so convinced to buy into a Porsche through ownership," Zellmer said. People want to have access to the brand without being locked into a three-year lease, he said.

Since 2017, the Porsche subscription program has cycled through 325 members, mostly in Atlanta. About a third of members enroll in the program for at least four months and swap vehicles on average two times a month.

The COVID-19 pandemic, however, has affected Porsche's subscription program. It has 70 percent of the members it had before the crisis began, which has hampered profitability, Zellmer said.

In July, the Las Vegas subscription program was temporarily suspended because of the pandemic. It's not known when the service will be reactivated.