ked

To add to this high quality discussion, I'd like to remind us that, "you can't go home again." The auto industry, motorsports, PAG, in fact, the world-at-large is not what it was when we got into sports cars (for me starting in the early 60s). Despite PAG's profits, things can go bad in a hurry for a niche provider these days. Indeed, building stripped-down, low price, low margin, low volume sports cars is the quickest way to a takeover of Porsche. What they ARE doing, even if we don't like some of the resulting product, may be the best way to forestall Porsche's acquisition.

Things are better in many ways ($s to perf.), worse in others (traffic), but undoubtedly different & there is no going back (how long ago was it that you could buy a REAL GT-40 for less than the new factory replicar?).

Many complain of the Cayenne, the soft & plain 996, the Boxster-poseur (I've never figured out why people critique a product based upon its buyers...), but consider - who can extract 9/10s or more of these vehicle's performance envelope? & as much as I see ample reasons to be critical of PAG product planning, I note that there are some very fine high performance models yet available. I think that if we had been exposed to the C4S, BoxsterS, GT2 & GT3 (not to mention the Carrera GT) back in the mid 70's, we'd have gone nuts.

My concern is that passion for engineering & product evolution / improvement via competition has become secondary to specific financial goals. If this is the case, indeed Porsche's leadership will have gotten their priorities reversed - and Porsche will fail for their error. For Porsche as an independent business, good financial results must always be a second order consequence of designing, building & selling unique, high performance motorcars.

Petevb

Thanks for the interesting mix of responses, reflecting the diversity of Porsche’s customers.

If all that counted when buying a car was performance and bang for the buck we’d all have big motor 914s, GSX-R 1000s and Radicals. The issue is that the total package including build quality, reliability, image, comfort, practicality, feel, price and performance is weighed differently by each consumer. Given that the average person drives a sedan it’s clear that the largest portion of the market isn’t ranking performance at the top of its list. Porsche doesn’t either, and I believe they shouldn’t- as has been pointed out the market segment is just too small to support them. Over time, though, performance has clearly been slipping down on Porsche’s priority list. This has allowed them to appeal to a wider audience, which is good in that it brings cash. But they’ve gone too far, giving up too much of the top of the performance market that helped to create, and it’s going to get them into trouble in the long run…

I don’t believe that Porsche should drop the majority of its lineup and focus entirely on the hardcore buyer. I’ll tolerate the Cayenne if it helps to pay the bills in the long run (that remains to be seen). I do feel they need to increase power across the board to keep up with the market and protect their reputation, but otherwise stick with a good thing and let the bean counters keep the company profitable in good times and bad. I strongly believe, however, they also need to add better, more affordable “RS” models to fill the gap they vacated and keep the hardcore guys happy. Both the extra power and the specials would be relatively easy goals:

First, an across the board power increase would be as simple as a commitment. Porsche released the 996 with a 3.4L motor in a strategy of planned obsolescence- they knew full well that they would go to 3.6L and then probably 3.8L. Starting with a bigger motor in the first place would have kept the 911 in its traditional place in the pecking order. Any extra money needed for this path would have been both nominal and well spent.

Affordable specials, admittedly appealing to well less than 5% of the market, would also be an easy way to compete on a bang for the buck basis: IMHO a stripped hardtop Boxster with nothing but a 996 motor in it would not compete with the 996 very directly if it was only available with without A/C or power anything (the vette would still be quicker in a straight line, but you’d catch him in the corners- just like old times). A similar 996 (a la the club sport) sold for what it cost rather than what they could get would insure the 911 kept its crown, and a GT2ish car for 110K would round out the top end. This obviously isn’t the only way for Porsche to compete performance wise with the newest crop of sports cars, but it’s likely the most affordable. I am finally in the finical position where I could get one of these cars new if they were available. If Porsche can’t keep me, someone who grew up with Porsches and has significant brand loyalty, as a customer then they’re in real trouble. BTW, I don’t think they can make a car less expensive than the current Boxster for brand dilution reasons. I suspect the low end models would make it harder to sell the high end (image), and they will need to choose one or the other.

A couple of you suggest that Porsche can’t afford to either build convincingly world-beating sports car or race cars given the change in the automotive landscape. I don’t buy it. Porsche is by no means a giant, but it makes about 1/4 of the profit of VW or 1/8 of Toyota and has disproportionate engineering resources. That is not chump change at all, especially since other car companies are attempting to market trucks as well as sports cars. No, they shouldn’t take on Toyota at the top of F1, but there is no reason they can’t top other areas. They are not even taking the Cayenne to Dakar? Come on. Again not racing saves money in the short term, but in the long run it hurts them.

To me Porsche’s priority shift (or decline) relative to the rest of the market is painful. In ’78 the standard 911 had 38% advantage in power to weight over to Vette- it’s now a 23% disadvantage. This has little to do with the changing automotive landscape, IMHO, but rather reflects what I said earlier- that performance has slipped down Porsche’s priority list. Extremely dangerous for a company that claims to be a sports car manufacture. The short sighted chase of maximum profits is already costing Porsche what should be loyal customers- I fear for its future.

BeerBurner

This is a great discussion!

Most of the major points that I could say have already been said. I do agree that Porsche is simply offering what the general P-buyer wants, which is more luxury. Even though the Cayenne does make me cry, I can't blame them for selling a vehicle that people are going to line up out the door for the opportunity to spend $80k plus on it. I mean, hey, I'd do the same. And if it really does help keep them independant, well, that's worth it to me. (And hey, at least they made it genuinly fast...)

The thing that I truly lament is the added weight of modern sports cars. And I don't mean just with Porsche, but also Ferrari, Lambo, Corvette, etc. Some of it is unavoidable... Crashworthiness, emission controls, chassis stiffness and all of the ABS, ESP, traction control, and all of those other little technogadgets will add weight to the car. But in the end, there are very few people out there who would be willing to spend $50k+ on a car that requires them to roll up their own windows! Hell, even I want a nice interior and the like in the Porsche that I'm going to do my street driving/cruising in!

Gentlemen, whether we like it or not, the true sports car is all but dead. There is the Lotus Elise and a few other very small companies that still produce true lightweights, but in the end, people want luxury with their performance. For the most part, if someone wants a lightweight exotic, they have to strip it down themselves.

Porsche's current trend doesn't suprise me, and honestly, I'd think they'd be foolish to do anything else. The only thing I'd ask is for some reasonably affordable (relatively speaking, of course!) RS or Club Sport versions for the small percentage of enthusiests who will actually track the car and demand the lighter weight without looking too spartan on the inside.

But then, I will likely never buy a new Porsche, even if I could afford it, since I have this aversion to buying new cars. However, my brother will be in the market for a new 996 (or 998, if that's when he ends up buying the car) and he wants all of the nick-nacks. Who should Porsche listen to?

Hopefully, this post made sense. I just woke up...

BB.

delhi

I find it so amusing to watch a Porsche commercial of a guy revving his Cayenne to his buddy and told him how cool the sound from the exhaust was. Err... isn't that a VW engine in there? It's not a true blue Porsche flat-6! How ironic.
Anyways bottom line is Porsche needs to make money to survive in this market. Back in the 70s and 80s other car makers were playing catch up in the sports car segment. fast forward to the 21st century, it's quite level. A 350Z owner will not neccessary trade his car for a Boxster nor vice versa.
If you're really a car enthusiast, go buy a the upcoming Lotus Elise. 0-60 in less than 5 seconds and can hang with any clubsport and GT3 on a track let alone spank any normal 911s.

Steve Wilwerding

Err... that's an all-Porsche engine. Only the Cayenne V6 has a VW engine - the Cayenne S and Turbo models have Porsche V8 engines.

Also, what is a true blue Porsche flat 6? Most people would not include the Boxster and 996 engines as "true blue" engines because of their water cooling, so I guess Porsche doesn't produce a "true blue" Porsche engine anymore.

Perhaps you should check your facts before you post.

In response to everyone else, it may be instructive to read "Excellence Was Expected." Every criticism that is now leveled at Porsche (not real Porsche cars, new cars abadoning the old principles, etc.) have all happened before to Porsche. The fact is that Porsche still produces cars that win races and those cars are some of the best cars money can buy.

Don't waste my time comparing 996s to Evos. That's like saying 60s Chevys were better than 60s Porsches because they had more power. That argument wasn't true then and its not true now. HP is not the ultimate indicator of performance.

delhi

I think you missed the point with my post Steve. What I meant was how Porsche is known by it's flat 6 burble and the 911 marque. Even today alot of the general public can't tell what a 944 is. Most likely a variation of the gen II RX-7. hence the 'true blue' flat six comment.
Yes many argues what is a true flat six for Porsche 911. an aircooled 911 or the new water-cooled 911s/boxsters. really to me a production Porsche just ain't right if it doesn't have a flat six (be it air-cooled or water-cooled)....and an engine slung at the rear.
also I notice the enthusiasts' beef with the current Porsche offerings is it's more becoming a GT cruiser car mfg than a razor sharp sports car. Also if Porsche can make a similar 911 for the half the price why not pass on the savings to buyers? Oh.... then the Porsche mystique would be lost if everyone that can afford a 350Z can also buy a 911? Hard to please I can see.
so take it easy and don't get too worked up.

classic911

Maybe Porsche is waiting for a NASCAR style-pickup truck racing series for SUVs so they can race the Cayenne!!!!

All kidding aside, I like the idea of a Boxster without all the BS on it-the lighter weight and price tag would be worth it, especially on DE days, which is what owning a Porsche is all about, at least to me.

As was set forth above, at the end of the day Porsche is in business to make money and they are doing well. The biggest fear I have is that of Porsche losing sight of its heritage.

ked

Interesting that the Porsche engine note is a signature of its brand identity - VW ancestry, 4 cams, turbos (there's nothing like listening into the 917-30K motor on full throttle), the "sound pkg" era, & now witty commercials.

Petevb

Who are you trying to kid?

According to Road and Track, new 996 vs Evo:

0-60 4.8 4.9
¼ mile time 13.4 13.4
¼ mile speed 103 105.1
60-0 braking 108 117
80-0 braking 194 204
Skidpad .88 .91
Slalom, mph 68.9 67.6

Which column is which? Oh yea, one has an as tested price of 30k, while the other is 79k.

You can argue that one is more fun to drive, has better build quality, a better image, etc, but don’t even try to argue bang for the buck. I totally agree that HP isn’t the ultimate indicator of performance, but the point is that Porsche isn’t even close to having the corner on the braking and handling market it once had. This ain’t the 60s.

More bad news for Porsche:

http://www.thecarconnection.com/index.asp?article=6735

http://www.thecarconnection.com/index.asp?article=6729

And this quote about the new vette:
“we expect an upscale Z06 with 500 hp and we have also heard rumors about a super-fast version with 700 hp…”

A few of you have made the valid point that perhaps Porsche was never the car company I like to think it was. Maybe true, but I used to be a whole lot better than it is now...

sschmerg

Not quite sure you can believe those road tests; there are too many variables to make much of those numbers. Try driving both yourself and then tell me if you think the EVO will run with the Porsche.

That said, the EVO does appear to be great bang for the buck, but if you drive one, you'll find it is nothing like the Carrera in build quality. Not that it is poorly built by any means, but the EVO is not a "luxury" sports car like the Carrera is. They are not in the same market. Of course, that is what a lot of folks here are complaining about...

If Porsche is going to put together a high quality, luxurious product, they are going to have to charge more for it, simple as that. The EVO is for kids. It's more like a Mustang than a 911. Not a knock on the EVO, just reality.

Same deal to a lesser extent with the Corvette. The Vette has great performance for the dollar, but it is just not quite as well built as the Porsche. The C5 Corvette was a big step-up in quality though, and I expect the C6 will be even better. The Viper is an even better bang for the buck example.

If you take this pricing argument to its logical extreme however, then a Ferrari or Lambo are garbage because they cost upwards of $200k. Bang for the buck, the 911 GT2 seems like a steal compared to the Italians, but I think we can all agree that this argument does not hold up to that sort of scrutiny. Of course, there is a certain cache to having a Porsche or a Ferrari that you'll never get with a Mitsubishi.

-Sean

P.S. That Chrysler supercar looks absolutely insane! Everybody better watch out for that one if it makes it to production.

pjc

Some interesting comments from the UK Business perspective - dated 6th Jan - BBC Business news on-line

PJC

Porsche's daring expansion plan


Analysis
By Jorn Madslien
BBC News Online business reporter



Porsche is keen to launch a string of new models.
Radical change is seen as vital to secure the independence of the German car maker Porsche, but the risks involved could be huge.

At the heart of the Porsche revolution is its Cayenne sports utility vehicle (SUV) which is widely hailed as the company's saviour.

The Cayenne hit the ground with its wheels spinning in December 2002, and the sporty truck has roared ahead ever since.

And this, insists Porsche, helps make up for sliding sales of its two other models, the 911 and the Boxster, which compete in the forever volatile and increasingly competitive sports car market.

"It was mandatory for Porsche to build a third leg to be able to balance that kind of volatility... and put the company on a solid growth basis, because we have to grow to stay independent," Porsche's marketing and sales director Hans Riedel told BBC News Online.

On the face of it, the strategy seems to be working.

We are not a big player, but we have become a substantial player

Hans Riedel, Porsche marketing and sales director


After the SUV's launch, Porsche sold 20,000 Cayenne's before the end of its financial year in June this year, a sizeable proportion of the total 67,000 cars sold during that year.

This year it hopes to sell 30,000, and if it succeeds, the Cayenne should soon account for well over a third of Porsche's total sales of 70-75,000 cars.


At the glitzy Detroit Motor Show, US carmakers fight back.


In pictures

And yet, Porsche's position remains highly precarious. From the company's own sales figures, two frightening facts have emerged.

Slipping sales

The first one is bad enough: the rate of Cayenne sales is already slowing after the first six months' flurry.

Sales of 30,000 in 12 months do not measure up to the initial sales of 20,000 in just half-a-year.

Besides, the sales recorded by Porsche have been to dealers, some of whom have found it hard to shift the Cayennes without offering discounts - a concept previously pretty much unheard of in the luxurious marque's showrooms.


Is Porsche in deep water?
But the second fact - a recent fall in sales of the powerful sports cars whose quality has built a brand that commands respect - is potentially much more damaging.

"We have the cache of a brand that is at home at the top end of the market place," insisted Mr Riedel, who is one of six board members at Porsche AG.

"By now, having three models in the Cayenne range, and not neglecting our core business with the Boxster and the 911... we don't want to move downwards."

But some critics are convinced that Porsche's traditional sports car customers are deserting because the launch of an SUV has taken some of the magic away from the marque.

Common sight?

If the doomsayers are right, then things can only get worse.

The family friendly off-roader with the sporty badge has recently become wallet friendly too.

Porsche has launched a half-price Cayenne with a, by Porsche standards, relatively feeble 250bhp V6 Volkswagen engine.

At £34,500 on the road in the UK, this Cayenne is bound to become a popular alternative to the similarly priced Volkswagen Touareg or even the BMW X5.

But while V6 sales are expected to go through the roof, the potential damage to the marque's image might merely hammer sales of 911s and Boxsters even further south.

Customers might well desert the near £70,000 450 bhp Cayenne Turbo V8 as well if the SUV's distinct body becomes a common sight on the road

And Porsche's determination to go mainstream is set to continue with the forthcoming launch, in 2007, of a four door coupe that will take on saloon cars like Jaguar's XJR, BMW's M5 and the Mercedes E55.

Luxury items

The current trend in the automotive industry is for car makers to aim high in order to boost profits.

Mass-market motor makers are working hard to make customers pay more for their cars by offering them more luxury and fancier designs.

This is why, in simple terms, luxury cars are much more expensive to buy, but only a little bit more expensive to build.


Are loyal customers deserting the marque?
In other words, they are more profitable.

Hence, if Porsche shifts its reliance away from profitable Cayennes with V8 turbo engines, and from deliciously sleek and powerful 911s, towards relative budget versions for the greater masses, then the company's profit margin might suffer.

If the shift also dents Porsche's exclusive image, then it can only get easier for the likes of Ferrari, Aston Martin, Lamborghini and perhaps even Bentley to poach its customers.

Bottom line

None of this is new to Porsche's top dogs, off course, and it is not that they do not care.

It seems their plan is to accept lower profit margins in return for rising volumes in the belief that this will lift the car maker's overall return.

"We are not a big player, but we have become a substantial player," said Mr Riedel.

By raising the number of Porsche's sold to 100,000 per year - from less than 50,000 cars before the Cayenne's arrival - the car maker could add double digit percentages to its already lofty profit figures.


Budget-priced Cayennes are bound to be popular
Porsche is already said to be the most profitable car company in the world, so the financial nous of its management seems hard to fault.

Indeed, even the recently crafted Cayenne which cost a fortune to develop is already profitable - essentially because the development cost was absorbed by its balance sheet even before the SUV was unveiled.

Porsche's dilemma is this: Unlike its main competitors, it has no large parent company to bail it out: Ferrari is backed by Fiat, Aston Martin by Ford and Lamborghini and Bentley by Volkswagen.

As such, growing into an automotive firm that serves a much larger market might serve an important purpose: It could safeguard Porsche's independence.

Though if the expansion efforts flop, Porsche could become a takeover target sooner than it would have, had it simply remained a low volume, hugely profitable producer of an inimitable sports car legend.

GMS

One thing that seems to have been forgotten in this debate is that the vast majority of new Porsches are leased, not sold. I don't believe this generates brand loyalty as when the lease expires other, different make vehicles are available. Has anyone surveyed what happens when Boxster leases expire? There are so many of them around at the moment I don't think that this is helping the long term residual value. Without brand loyalty and with poor residual value of lease returns we aren't looking at a good long term financial outcome for Porsche.

Steve Zitelli

As far as price goes Porsche could never compete.The big 3 and the japanese make thier money selling passenger cars and make very little profit on their sports cars.Compared to them Porsche is a small production automobile company.Also they get hit with a tax when they come into the USA.Comparing it to a Viper,Vet or Mustang is like comparing apple and oranges they are totally different.All that said I wish they were more resonable,maybe they should do a joint project with VW like the 914 to produce an affordable car.

Eric-17

Great thread... I agree wholeheartedly with Jay, the name of the game is survival and 'bean-counters' are an important part of the process. I work in the grocery wholesale/retail industry for the smallest independantly owned company in the U.S... Our focus the last couple of years has been to find ways to differentiate ourselves (and our retailers) from Wal-Mart by trying new marketing schemes, product lines, services offered at store level, etc... Many of our 'old timers' complain that we are losing our 'hometown family' image but... That wasn't working anymore. Though we try to hold on to much of that 'image', the world has changed. We must aggressively find ways to compete and survive. I can't imagine the conversations at PAG are much different.

Although, I fear my comments fall on deaf ears as I also shy away from buying brand new cars (even if I could afford the latest greatest sports car). I am satisfied with the knowledge that for many years too come there will be plenty of worthy, wonderful Porsches of many flavors available at great prices... Image be damned for me, the pre-owned buyer... I know what a Porsche is and will soon bite the bullet.

Have a great day!

Eric

ked

Many of us self-described hard-core enthusiasts either can't (relative poverty) or don't like to (Depression-era Calvinist-type upbringing) buy or lease new, expensive sports cars. The growing population of off-lease Porsches going begging may be just great for us - we get to cherry pick the most desirable examples at a good price.

This is win-win for us & PAG. Porsche's perf. image is upheld by true believers who keep the best cars in primo shape for many years, the resale market gets support, & we get what we like to drive.