STG

They will always sell, develop, and promote sports cars. I'd like them to lead the industry rather than used as a halo marketing campaign though. Teasing and pissing off enthusiasts in order to sell more Macans. The GT cars are becoming marketing machines and sales incentives to dealers. Not really a purist way of looking at things. Build great cars that are attainable by people who want to enjoy them.

Unfortunately, most of their profits and sales will be coming from non sports car models. It's happening today. That influences a lot of decisions that may not benefit the enthusiast circle.

I don't want to hear the tired "make Macan and Cayenne money to keep investing in 911's". That's not really accurate. They keep cutting costs and raising prices on the 911/718 by the way. The other models don't subsidize the sports cars. They are all individual profit centers.

They've built up a large dealer network with huge remodels and big dealerships. Not to mention these Experience Centers. Their Porsche franchises want a return on their investment. At this point, their business model only works by selling and developing more non sports car models. They cannot survive on 911's and 718's. They've grown too big to only be a sports car company. Many have lost focus when trying to be too many things to too many people. Time will tell ....

Not to mention, the "most profitable" car company will learn a lesson as the non sports car buyers aren't as loyal and cross shop more than ever. Price is a bigger factor to them as well.

FlatSix911

You are spot on ... Porsche sold more Macans than all 911 and Boxsters combined.
All models are down year-to-date except for the Macan.

planet

In the "Finance Lite" view of the world, sure. In reality, I doubt it's so simple.

The Macan's extremely lucrative sales would have been possible without the brand value and R&D investment of the 911. Brand value I think we all understand. But the value to the company to have a reasonably scaled real world platform which you can use to productionize more advanced tech is quite high. Once you prove it out in the more demanding world of the 911, it's far, far easier to adapt across the range -- and perhaps to other brands as well, in principle.

Anyway. I would bet all the money in my pockets that PAG corp finance have a more nuanced view than simply "individual profit centers".

STG

"That's important, because while Audi and Porsche together account for less than 20% of the passenger vehicles sold by VW around the world, the brands generated 67% of its operating profit in 2015."

Amazing statistic!

http://www.businessinsider.com/volks...orsche-2016-12

blschaefer1

Remarkable statistic. I knew Porsche's margins were huge, did not know Audi's was that high. What this tells me is that VAG is going to need to depend on those brand's margins more than ever, and there are only a few levers they can pull.

They can raise price, but those brands are already overpriced in their space. Not a good move.

They can cut functional costs (R&D, marketing, admin, raises, benefits, coffee breaks, etc.) and likely will. Not a good thing but a natural reaction in such cases.

They can reduce raw material costs, and likely will. Slippery slope as quality will suffer which is highly dangerous in a competitive market space.

They can also reduce sales costs, i.e. incentives (consumer and dealer), but this is also a slippery slope because that will adversely impact sales of the very brands that drive the bottom line.

Conversely, they could get even more aggressive with marketing and promotions on the profitable brands. They will need the leverage of volume to drive the bottom line. Let's hope that's their move.

VintageRacer

I like my 991.1. It's a great car.

My early long hood small bumper car would preform better than any Cayman/Boxster.

FlatSix911

This is more bad news for Porsche ...

German regulators are investigating whether Porsche may have been involved in Volkswagen's emissions scandal

German government regulators are examining whether Volkswagen AG's subsidiary Porsche programmed its vehicles to cheat on government tests of fuel economy and carbon-dioxide emissions, according to reports in the German business press. The news follows reports last month that the U.S. Environmental Protection Agency and California regulators had opened investigations into similar allegations involving VW luxury-car subsidiary Audi.
If these investigations pan out, they could open a new dimension to Volkswagen's ongoing diesel-emissions cheating scandal, one that doesn't necessarily involve diesels but could implicate VW's most important profit generators in cheating on tests that are of concern to governments all over the world.

According to a report in German business magazine WirtschaftsWoche on Thursday, Germany's Federal Ministry of Transport and its Motor Transport Authority (known by its initials in German, "KBA") are investigating whether Porsche equipped its vehicles with software that can detect when a government test is under way. The concern is that the Porsches may have been programmed to switch to a mode in which less fuel is consumed and less carbon dioxide is emitted when testing is detected. Carbon dioxide emissions are implicated in global warming and are strictly regulated in the European Union (and elsewhere). WirtschaftsWoche has reported that Porsche insiders tipped off the government to the existence of the software.

VW's admission that its diesel-powered vehicles cheated on emissions tests was (and is) a big deal in the United States and some other countries but less so in Europe. The emissions in question with the diesel engines are oxides of nitrogen, which contribute to smog. Oxides of nitrogen are heavy regulated in the United States under the Clean Air Act (and extra-heavily regulated in smog-prone California), but European regulators have been less concerned with them. That's why the U.S. government's actions against VW over the diesel-emissions scandal have been much more draconian than Europe's and why California regulators have played such a large role in the efforts against VW. Those European regulators are very concerned about carbon dioxide, however. Carbon dioxide emissions are correlated with the amount of fuel burned by an engine; a vehicle that gets better fuel economy will emit less carbon dioxide. Because fuel-economy testing is a big deal in Europe (and therefore in Germany), VW is more likely to face harsh penalties in its home region if the cheating allegations are proven. It's also likely to be hit with a whole new round of penaties in the U.S. and other jurisdictions (like South Korea) that have already come down hard on VW for the diesel cheating. There's another dimension, too: While the diesel emissions issue might seem a bit esoteric to the average car shopper, cheating on fuel-economy tests isn't. If the allegations pan out, the Audi and Porsche brands could be seriously damaged as green-minded customers look elsewhere.
The concern for investors: This targets VW's most important profit centers

While there were a few Audi and Porsche models equipped with the diesel-emissions cheating scandal, the vast majority of the vehicles involved were VWs. The scandal appears to have damaged the VW brand in many parts of the world, but the Audi and Porsche brands appear not to have been affected by what has been seen as a "VW" scandal. That's important, because while Audi and Porsche together account for less than 20% of the passenger vehicles sold by VW around the world, the brands generated 67% of its operating profit in 2015. If the two brands suffered damage that hurt their sales or pricing power, the effect on VW's bottom line would be dramatic. That's the potential here. Stay tuned.

sctanton52

That is a very interesting article. If proven to be true it could lead to BIG troubles for the entire Porsche/Audi/VW brand.

But I also wonder what others marques have done, or are doing, the same?

subshooter

Every other marques is interrogating their design engineers to make sure that they don't have the same problem.

STG

Big discounts coming on Cayenne Diesels

http://www.carscoops.com/2016/11/por...yenne.html?m=1

disden

typically I like the updates, however the 718 redo is a complete disaster. They made it look smaller and less sophisticated and less sporty. Throw in the tiny turbo 4, and it's a car that can't truly excite anyone. Not sure why anyone would buy this over a pre '17 CPO Boxster.

Bemo

If this scandal spreads further it will spell more cutbacks, layoffs, and kiss good will repairs good bye

As for Cayennes, those are nasty SUVs...talk about lifeless steering and all else, that box takes the cake. I will NEVER again criticize the 911 steering, even with PSP it's in a league of its own even when compared to other sports cars I've driven

STG

I like the Cayenne. For its purpose, serves it well.

As far as the 718 four-banger? I think a big mistake and won't do well. For that $$$, better options to choose from. That price range is a tough one with ALOT of competition. That buyer isn't willing to spend extra just for a Porsche badge. For that $$, you can buy a nice pre-owned 991.1 or 997.2 or one of the other brands.

Bemo

I drove the new 718 and you're absolutely spot on with your assessment. While it's a nice car it's overpriced and I'd pick a 2nd used 911 all day long, instead.
I find myself perusing the CPO thread again.

The 991.1 is that nice that I want to buy it twice!

fuddman

Yes, I remember the software Porsche used. They put a smell detector in the seats and programmed it to sniff out the typical government environmental inspector. It seems they smell a lot more than most. Pretty easy to lean out the gas when a certain level of seat stink is achieved.

It's all so much BS. From the "source" which provided the tip off to the fools in government who devote their existence to harassing auto companies in the name of the popular farce called global warming.

By the way, VW never admitted they cheated on emision tests. Until they were told by the US EPA to either admit their guilt or stop bringing their cars to the US. In other words, an act of extortion forced their admission. What you might call high level extortion. Justified because of clean air, of course.