The "Ferrarification" of Porsche Led to a $300 Million Lawsuit from Dealers | Carscoops

      A lawsuit in Miami accuses Porsche of pressuring dealerships to establish exclusive showrooms, revealing significant conflicts within the luxury automobile industry.

      Porsche is facing a $300 million lawsuit from a major luxury dealership in Florida, heading to trial next March. The Collection alleges that its sales of Porsche vehicles have entered a "death spiral" and that sales have been on the decline for over ten years.

      The lawsuit was filed in 2022 and alleges that Porsche pressured The Collection to create a standalone showroom. When The Collection resisted, Porsche reportedly limited its supply of vehicles.

      Following the Covid-19 pandemic, it is claimed that Porsche sought to exert greater control over its sales network in the U.S., encouraging dealers to build exclusive facilities solely for their brand.

      When The Collection initiated legal proceedings, the luxury car market was undergoing significant changes. Following the resolution of a chip shortage, manufacturers like Porsche found themselves in a seller’s market where demand surpassed supply. Vehicles were often sold before they arrived at showrooms, leading to surging prices and buyers paying premiums.

      Analysts described this development as “the Ferrarification of Porsche,” indicating a shift toward scarcity and higher prices for the brand. As independent luxury car analyst Scott Sherwood noted, “Porsche, coming out of Covid, really pushed pricing hard and continually increased prices across the board.” He added that this approach is not conducive to fostering loyalty and repeat customers.

      The rise in prices for Porsche vehicles was not solely due to heightened demand; dealers were setting their own prices, leading to wide price variations for the same model. In 2022, Porsche sought to regain control over this volatility by advocating for brand-exclusive showrooms.

      Amidst this situation, The Collection, which also represents Ferrari and Aston Martin, claims Porsche urged it to invest millions in a new Porsche facility in either Kendall or Cutler Bay in the Miami area. The dealership declined, describing the suggested locations as “remote, suburban areas” with “virtually no market for Porsches.”

      The dealer contends that Porsche breached Florida’s dealer franchise laws, contributing to the downward trend in The Collection’s sales. Porsche refutes this claim, stating that the dealer consciously chose not to invest in a new exclusive Porsche facility while experiencing declining sales of new Porsche vehicles for almost ten years.

      Porsche AG, the parent company, has attempted several times to distance itself from the lawsuit as a foreign entity, but a Miami judge has recently rejected these attempts.

      Sean Burstyn, the founder of Burstyn Law and representing The Collection, explained to The Financial Times that this lawsuit concerns relationships among dealers, distributors, and manufacturers across Florida, and due to similar regulations in much of the U.S., the case has implications for the industry nationwide.

      Additionally, The Collection argues that after declining Porsche's request for a standalone showroom, the manufacturer began to withhold allocations of pool vehicles, which can account for up to 20 percent of a dealership's total supply.