djcxxx

The irony is that when Porsche just made sports cars for purists they were constantly alternating between modest profitability and insolvency. Only after committing themselves to non-sports car manufacturing, and of all things SUVs, did Porsche finally insulate itself from its history of sine wave finances. Agree w/ Nick about the 959, it was a major headache for Porsche in the time, particularly with the failure to obtain US importation. Only in the retrospectoscope does it appear so prescient and pivotal.

SToronto

Interesting that there is a viewpoint here that Porsche makes GT cars at perhaps the lowest profit of all cars or even a loss. This seems to be bolstered by djcxxx historical reference. I don't know where the truth is. But I find it incredibly hard to believe a corporation like VW or PAG would be making GT cars as loss leaders or low margin (compared to rest of range). Only reason would be for marketing purposes and to increase demand for the brand overall, but do they need to do that? Are GT cars moving Cayennes, Macans, Panameras, 718s and down range 911s to the point where it makes sense to price them at low margins/loss and take it as marketing cost.

GrantG

djcxxx

Pete Stout's new Porsche periodical 000 has had some really excellent articles on Porsche that provides an excellent insight into how much of a family run cottage industry Porsche was during much of its history. The Porsche we know today is a very different entity in terms of size and particularly capital, but the legacy of those years still permeates many of the decision making processes which in my opinion results in what appears to be capricious and inconsistent communications and decisions by customers.

SToronto

This is it...when you look at retail MSRP it seems like a steal! But are they really doing it at a near loss or loss? I find it hard to believe.

GrantG

No, not at a loss. But well less than average margin % in the lineup. Using many of the GT cars for racing homologation must factor into this as well...

James Walker

Archimedes

I agree, and all of the models have significant, though different types of, development costs. The idea that the development cost for the GT cars is astronomical or materially different as a percent of revenue than the regular cars is very unlikely to be true. Additionally, from a dealer perspective, a GT car takes up the same space on the lot as a regular Carrera, and the $ profit margin is higher, regardless of whether the percentage may be slightly lower.

Freddie Two Bs

On the other hand, a Gt3 is $4k more than, say, a C4 Cab GTS, which while a wonderful car is a parts bin special costing $30k more than a C4 Cab.

Do you really have any doubt on which of the two, C4 GTS Cab GTS or GT3, carries the higher margin?

Or a Panny TurboS ehybrid (80k over the Base e Hybrid), or a Cayenne Turbo S $43k over the normal cayenne Turbo?

I say that in the $150k to $200k range, the GT3 margins are the lowest of the lineup, and on a percentage basis, they're the second lowest overall, with only the base versions of the various models being lower.

Nick

Why on earth would any sensible business price a highly coveted product with a lower profit margin than its other less desired products? It would be a foolish business decision. I can understand pricing it at the same margins as other products ( a could list several reasons to do so) but to reduce you margin on one of your most successful products would be the mother of stupid business decision.

Jimmy-D

I do not disagree unless they think these cars drive more business with their other models. A Marketing ploy to get more traffic to the Dealer. Whether in these times this still works but for those not familiar with Porsche maybe it does

ipse dixit

As a backdoor way to provide dealers "trunk money" without those actual cash outlays showing up on corporate ledgers to affect overall accounting and roll-up numbers. Which won't have an affect on overall corporate numbers, and maintains the corporate patina that PAG doesn't have to incentivize the sales of their cars.

So, instead of Porsche providing dealer incentives to move a Panamera (which goes on the corporate ledger as an expense of some sort), Porsche can simply provide a GT allocation to a dealer, knowing that a dealer will be able to sell the car for a markup, which in turn is an indirect way of providing "trunk money" without that cash outlay ever formally appearing on any ledger.

promocop

Well stated and spot it. PAG/PNA are making a bundle off the cars!

Nick

Both plausible reasons but they beg the question. Is there a business need to price your must prized product below the company's standard margins?

I suppose one can argue that Porsche brand is about performance/value. Porsche could look at the competition to the GT3 like the 570S, Z06/07, R8 and others deciding the need to price the car in the middle. From a business standpoint I fail to see the logic if that is what Porsche did.

James Walker