Duke I

Eduardo, then you must have skipped the day it was taught. Most B-Schools teach that when supply is inelastic or relatively inelastic in the short-term, the price curve shifts to bring supply and demand into balance.

That said, Chuck's conclusion is correct that the price for a 911 has remained relatively flat in real terms (inflation adjusted).

Z356

Supply of the 991's is not inelastic. Boxster production in Zuffenhausen can be shifted to Osnabrück, where the Cayman is currently assembled in its totality and where some Boxsters are also being built. A third work shift can be added to Zuffenhausen to increase production. Additional bodies can be welded & painted at VW's Hanover plant, which is where Panamera bodies are currently sourced from. The Panameras can be left to be painted/welded at Hanover after 2016 as they currently are and Porsche's expanding plant in Leipzig (currently destined paint/weld Panameras) can be used instead to expand 991 production at that location! Additional 991 bodies can be produced at the VW plant in Zwickau, Germany that currently welds/paints the Bentley Continentals before they are shipped to Crewe for final assembly.

So as you can see, the possibilities of expanded 991 production within Porsche & the VW Group is excellent. The ability of Porsche to keep prices high for the 991 by deliberately limiting supply of that model is also highly diminished by competitive market forces which offers excellent rival products to the automotive consumer in abundant quantities, especially in our North American market.

Saludos,
Eduardo
Carmel

Duke I

Was not commenting on the pertinence of the paradigm on Porsche, per se, just supply/demand dynamics, in general. I am relieved that the IV schools are with the rest of us on microeconomic theory. Line retooling would, no doubt, still result in supply dislocations for a time.

Porsche is clearly mostly constrained by competitive market forces in a decidedly shallow market for demand of such highly-priced, high-end, high-performance autos.

Abraco.

mgent

Without PTS, isn't it hard to spec a Turbo S to well over $200k? It comes with most of the expensive options already - Ceramics, Carbon Fiber, etc... I doubt that dealers would order a bunch of $229k cars for inventory, with crazy PTS or really expensive options.. Maybe they were orders that weren't closed - switching to or back to GT3s, etc?

As far as general 911 pricing, the base pricing isn't bad still for the amount of car you get... The challenge is adding in the options you would want/expect in a 100k+ car - not assuming a 'stripped' car for performance reasons - that's when the price starts getting up high... I have a high $130s C2S Cab, and that's a good bit higher than my 997.1 C2S Cab (both manual).. Same thing existed for the Z06 towards the end of its life as well, initial base Z06 was 60? or low 70s? toward the end, with all the carbon, performance, etc packages, I saw Z06s on lots that were 108, 110, etc...

The Turbo S is not an example of trying to move the entire 911 range up-market, but using a model to extend to and capture that market... They're not trying to ignore the engineers and scientists to capture fund managers, they're using the Base C and CS models for the engineers and the Turbo S for the fund managers, after all most don't drive their F-cars daily... I suspect that we'll see the GT3-RS priced near 180 as well, for the same crowd...

OldGuy

I dont know about this. 80% of GT3 drivers (which I was one before my back was realigned by racing motocross) go to the track. I dont see upscale drivers going to the track. Its rare to go to the track and seeing an Fcar there.
I have no clue what they are doing with the Turbo S Most are in the 200K range unless they are Cabs.
But just a couple years ago the GT2 RS was 189.

How in the WORLD does a $150K car not have a back up camera?

Mondrian

I am having a hard time coming up with a direct rival for 911 & its blend of prestige, performance, reliability, usability, economy, performance, resale & 2+2 seating. All the rivals I can think of come up short on several of these parameters.

New & cheap finance options such as leasing is what has driven the overall sales boom in the exclusive sector. This means that you do not need $100,000 in cash to buy a new Porsche, just $1000 or 2.

Zohan

If I can't afford it I don't need it

solomonschris

I'm not sure what Zohan is trying to show with his eroding dollar picture. The value of the dollar is not as important as the number of dollars one has to do purchasing with. If the dollar's value declines 50% but you have three times as many dollars you have greater purchasing power. My father was a successful executive who made $22,000 as president of a health insurance company. We had a middle class life. Inflation has indeed eroded the value of the dollar, but most of us are making way more than $22,000 and as a result we are better off. The purchasing power of the middle class has been flat or shrinking since 1980. An economist from the Chicago school will have a totally different explanation for this than one from Stamford or Harvard. I'm not trying to high jack this thread, but since the moderators left Zohan's post up there I thought I'd respond.

mgent

OldGuy, fundamentally I agree with you, but if I'm Porsche, I have the GT3 for you... There may not be many Fcars out on the track, but there are probably a number of drivers on track that have or could have Fcars at home... This gives them a street/track combo car that they don't pamper like their Fcar... Either as a replacement or as an addition. I have a 458, which will never see the track, but would have no problem adding a GT3RS (replacing 991 S Cab) to track and to use around town... Different car for different purposes... As a point of comparison, I've also been considering a Spec Miata or a track-prepared BMW or Cayman to have as a track-toy, so you would see me on track in a Miata and not lump me into the Ferrari crowd...

If it's somewhat limited edition, they will max out their profit on it... I'd be willing to bet a good number of GT3 (not all, but some to many) buyers would be willing to trade-up to a $180k GT3RS...

John 996 TT Cab

I think that Green Turbo S above was on display in the lobby of the convention centre at the PCA Parade in Monterey in June. Looked nice but not my cup of tea. That would be over $285k plus 15% taxes in British Columbia.

MJBird993

I am protesting this blatant price gouging by refusing to buy a Turbo S in the future!

I'm not familiar with this term, what does it mean?

The Corvette has always been a performance bargain. Ever since the C4, it could not be beat, price-wise. The problem with the Corvette (and I've owned 4 of them, so I'm nearly an "expert") is that they are saddled with GM bureaucracy and marketing. You can't say that GM has a bunch of lousy engineers, because those folks are able to pump out a lot of reliable horsepower, with stout, massive torque on regular gas out of a pushrod normally aspirated engine. The stupid car has fiberglass transverse springs and yet it will out-handle nearly anything else on the road. GM invented magnetorheological suspension, now licensed to other manufacturers such as Ferrari and (I think) VW group, which includes a sports car manufacturer. The problem with the Corvette is that they squeeze every single last dime out of it that they can, with cheap components from the lowest cost supplier. As much as I admire what they've done with what they've got to work with, it's still a plastic Chevy and the 911 is a superior car in every way except cost. Hmmm, I appear to have digressed a bit.

OG is right, it's gotten out of hand, but as long as people like me (and most of you guys) are willing to pay nearly twice what a Corvette cost for a car that doesn't go as fast and has smaller cupholders, then Porsche will keep building them. As long as someone will pay 1/4 millski for a turbo, they'll keep making them. Why not?

Jerry991

What percentage of 911 buyers selects an in stock car versus an ordered car? Many buyers have certain options that must be on a car for him to consider it while others have a mandatory color, etc. so dealers have to limit their inventories. On the other side options are very expensive and a buyer who is not interested in paying for some options on an in stock car means that either the dealer will have to eat the cost of those options to sell the car or try to convince the customer to wait months for an ordered car. You might say Porsche can viewed as its own worst enemy by offering so many individual options as opposed to option packages.

solomonschris

MJBird993,

Let's assume you are running a hedge fund with 300 million in it. You get 2% of the value of the fund as a yearly managing fee, in your case that would be 6 million. Let's further assume that you underperformed the market last year and grew the value of the fund only 8%. This works out to 24 million, of which 20% is yours, or 4.8 million, for a total take of 10.8 million for underperforming. If your investors stick with you you get a nice raise because your 2% management fee is now based on the increased value of the fund or 319.2 million. That' a raise of $384,000. If that doesn't sound like a good enough deal, keep in mind that the federal tax rate on your 4.8 million is taxed at the long term capital gains rate. Not all hedge funds have this fee structure. I believe I read that the fund Mitt Romney ran charged 30% of profit. You can also invest your self directed 401K in companies you invest the 300 million in. Very sweet deal!

Larry Cable

checkout this 4.0RS http://www.jzmporsche.com/porsche-fo...l-for-sale-578

KA-Ching

mgent

Solomon,

To be fair, the management fee is not personal income, but money for operating the fund... So a $300M fund has 3 or 4 managers, a few analysts and an admin, probably an office and some travel, definitely some legal, marketing and accounting fees... There's most always cash leftover for bonuses, but not $6M in the pocket... And many times the 20% is above a certain threshold, depends on the fund's history and leverage when raising the fund... A really good business, but not as good as it would first appear...

Different funds have very different fee structures.. The 2% is usually based on the size of the fund, sometimes lower (bigger funds) sometimes higher (smaller funds)... The 20% is driven by the fund's performance history, but usually isn't much below 15% or above 35ish%... Many times there are thresholds like a funds rate, broad market performance bar, etc... They real money for the managers is their take on the investments they make, being able to hold those investments longer than the life of the fund and taking advantage of carried interest.. most have personal money invested in the fund as well...