Help me understand Porsche's Business Model...
12-04-2017, 09:56 PM
#1
Rennlist Member
Thread Starter
Help me understand Porsche's Business Model...
I've bought two Porsches in the past 4 years from the same guy. But if I want a GT3 or GT3RS, I have to get on a list and they only give out their limited allocations to their best customers.....the 918 buyer, the last guy that bought 4 PTS GT3RSs and then flipped each of them 12 months later with 12 miles on the odometer for a $50k profit each. My SA mentioned that customers get pissed that although they are good customers, they are not the "best customers" and therefore don't get an allocation.....geesh.
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
12-04-2017, 10:08 PM
#3
SJW, a Carin' kinda guy
Rennlist Member
Rennlist Member
Go to your guy and offer ADM. You will get a car. Or just take a car off their lot they need to sell at MSRP to get them some extra money in your GT3. You want one, you will get one. You just have to pay.
Look at it this way, you probably got a pretty good discount on your C4 because the market will only command a certain price for that car. Same is true with the GT3. More people want them than there are available so you see either (1) MSRP dealers but they don’t have any available or (2) ADM directly or really good customers (who are not the flippers as those people are now blackballed). They are limited for the various reasons you state to a greater or lesser degree. I don’t think PAG is holding back on production it’s just that the demand is very high.
Look at it this way, you probably got a pretty good discount on your C4 because the market will only command a certain price for that car. Same is true with the GT3. More people want them than there are available so you see either (1) MSRP dealers but they don’t have any available or (2) ADM directly or really good customers (who are not the flippers as those people are now blackballed). They are limited for the various reasons you state to a greater or lesser degree. I don’t think PAG is holding back on production it’s just that the demand is very high.
12-04-2017, 10:13 PM
#5
I've bought two Porsches in the past 4 years from the same guy. But if I want a GT3 or GT3RS, I have to get on a list and they only give out their limited allocations to their best customers.....the 918 buyer, the last guy that bought 4 PTS GT3RSs and then flipped each of them 12 months later with 12 miles on the odometer for a $50k profit each. My SA mentioned that customers get pissed that although they are good customers, they are not the "best customers" and therefore don't get an allocation.....geesh.
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
12-04-2017, 10:33 PM
#6
Rennlist Member
Thread Starter
You are missing an allocation. Pay the current market price for a GT car or move on. Life is far from fair and neither is the allocation situation with GT cars. PAG knows what they are doing and are able to create exclusivity for their GT cars. The cash cow for PAG are every model except their GT cars.
12-04-2017, 10:45 PM
#7
Rennlist Member
I've bought two Porsches in the past 4 years from the same guy. But if I want a GT3 or GT3RS, I have to get on a list and they only give out their limited allocations to their best customers.....the 918 buyer, the last guy that bought 4 PTS GT3RSs and then flipped each of them 12 months later with 12 miles on the odometer for a $50k profit each. My SA mentioned that customers get pissed that although they are good customers, they are not the "best customers" and therefore don't get an allocation.....geesh.
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
Porsche's business model doesn't make any sense to me at all. If people want to buy a product at MSRP, why wouldn't Porsche build as many as are demanded minus 1?
My thoughts on the reasons....none of which make any sense to me.
1. Limiting production to drive demand? I can understand this for Halo cars like the 918, Carrera GT or the 959. ....but the GT3 or GT4? Nope. These are not Halo cars.
2. Limited Factory production capacity? Maybe.....but why not expand production, add a night shift or make more GT3s instead of Base 911s? They are all made at the same factory in Zuffenhausen. Build another factory.
3. Porsche needs to keep their average fleet CAFE standards within limits so they want to sell more efficient Turbo cars rather than NA cars like the GT3/4. I don't buy this argument at all. Lamborghini just came out with the fastest SUV on the planet with 650 HP......somehow they are able to produce this low MPG, high emissions car and stay afloat in the same regulatory environment. Why not build a factory in China or the US where EU CAFE standards are not applicable? Or if there is a tax for high emission cars, pass it on to the consumer and we will pay it....if they build them.
4. GT3s make less profit. Really? I doubt it. I think these cars are cash cows. How much additional R&D is necessary for the GT3? Not much I think. If they make less profit, raise the price. Demand is there to support it. GT3s making less profit? This argument makes no sense to me.
This whole Porsche allocation process boggles my mind. If I was running PAG and somebody wanted a GT3 at MSRP, I'd say put in your order and we will get it to you in 12 weeks. I'd figure out how to meet demand.
What am I missing?
In the case of luxury cars, Porsche has had decades of experience driving desire with rarity, probably starting with the first Carrera models. If they produced as many as everyone wanted they would have the Corvette business model, which remains an Everyman sports car simply because you can get it at a discount in as many as you want (says a current Grand Sport owner, LOL!). The Corvette, depending on the model, matches Porsche in almost every performance category, but severely lacks in the deep desire needed to make it a luxury item. Expensive, yes, but seen as a status, luxury symbol- no.
Trending Topics
12-04-2017, 10:45 PM
#8
SJW, a Carin' kinda guy
Rennlist Member
Rennlist Member
I am not really interested in what is fair or not. I am interested in the reasoning behind Porsche's business model. Exclusivity is obtained based on the price alone. Raise the price then...... but I shouldn't have to haggle or get on a list 6 months in advance based on a rumor that some one put in the internet etc. I am too busy with life and work to figure out how to game the system.
12-04-2017, 10:52 PM
#9
Race Director
Honestly- times are changing.
Today MSRP = Market Suggested Retail Price.
I have seen this in a contract.
You can not have it one-way. It is a shame but there are no hidden gems any more. Its like a good stock-by the time you find out about it - too late.
Who needs sales people soon????
Is a new C2S worth what they want at MSRP?? I certainly would not pay it but at the right price and I was looking- may be consider but not paying MSRP
I do not like the ways things are evolving but it seems like this is the today/ future.-
Today MSRP = Market Suggested Retail Price.
I have seen this in a contract.
You can not have it one-way. It is a shame but there are no hidden gems any more. Its like a good stock-by the time you find out about it - too late.
Who needs sales people soon????
Is a new C2S worth what they want at MSRP?? I certainly would not pay it but at the right price and I was looking- may be consider but not paying MSRP
I do not like the ways things are evolving but it seems like this is the today/ future.-
12-04-2017, 10:58 PM
#12
Rennlist Member
Thread Starter
I should be able to walk into any dealership and order a car and have it delivered within 12 weeks. If I can't because of supply limitations...then raise the price of the car. That is how supply and demand works in a free market economy.
The people that can't afford the high GT3 price can buy a base 911 and put a Tech Art 2 wing on the back.....
12-04-2017, 10:58 PM
#13
Burning Brakes
Porsche spent a lot of it's history short of cash. The Boxster saved them and the Cayenne made them rich but frugality is built into the DNA. The gobs of cash poured into the 918 development scared them. At $850k MSRP they were worried they couldn't sell 918 examples so they sweetened the deal by offering buyers perks like first dibs on future limited models. It worked.
Last edited by Hula; 12-05-2017 at 01:04 AM. Reason: words
12-04-2017, 11:05 PM
#14
Rennlist Member
2. They cannot work night shift due to an agreement with neighbors, I agree completely make more GT3s than base models because I believe you are correct with 4
3. They cant build in China its a German car company with its heart in Germany and the labor union would go insane, the standards apply to cars sold here, plus the psycho eco SJW environment in europe is such skirting the rules can be an issue and even send you to jail
4. I believe this to be true, perhaps some R&D costs a little higher but how much? its essentially a bigger motor with less content , no rear seats, less insulation, no electric wing, no sunroof, cheaper wring harness, more expensive motor, wheels and brakes-how could building more hurt demand? its like the McRib it only comes out during certain parts of the model cycle
I wonder if this model is working? I truly believe that many Mclaren sales are GT3 conquest sales, since F-cars are easier to get, its either buy italian junk or british junk (jk, no offense to our friends) The system as it stands serves only to produce more Mclaren sales, even I looked at one-just looked, sat in read about didn't drive, its like watching **** it not cheating
your last sentence is exactly how I would solve the problem
3. They cant build in China its a German car company with its heart in Germany and the labor union would go insane, the standards apply to cars sold here, plus the psycho eco SJW environment in europe is such skirting the rules can be an issue and even send you to jail
4. I believe this to be true, perhaps some R&D costs a little higher but how much? its essentially a bigger motor with less content , no rear seats, less insulation, no electric wing, no sunroof, cheaper wring harness, more expensive motor, wheels and brakes-how could building more hurt demand? its like the McRib it only comes out during certain parts of the model cycle
I wonder if this model is working? I truly believe that many Mclaren sales are GT3 conquest sales, since F-cars are easier to get, its either buy italian junk or british junk (jk, no offense to our friends) The system as it stands serves only to produce more Mclaren sales, even I looked at one-just looked, sat in read about didn't drive, its like watching **** it not cheating
your last sentence is exactly how I would solve the problem
12-04-2017, 11:06 PM
#15
Race Director
I should be able to walk into any dealership and order a car and have it delivered within 12 weeks. If I can't because of supply limitations...then raise the price of the car. That is how supply and demand works in a free market economy.[/QUOTE]
You need to define "free market". - sorry - I am playing a little "Devils Advocate" but it deserves some interest but no need to take this thread there.
You need to define "free market". - sorry - I am playing a little "Devils Advocate" but it deserves some interest but no need to take this thread there.