RallyJon

http://www.leftlanenews.com/2007/01/...28000-per-car/

Ya know, I'm all for capitalism, but wow.

"Here's your new 997. Worth $45k, but we'll charge you--what the heck--how about $73k? Yessir, you're a VERY discerning enthusiast, and you know value when you see it. Hahahaha, hooked another one, boss."

Bull

Interesting if true. If it is accurate, it is likely an average, and the last two 997s i looked at had stickers of $102k and $103k. Shows you where to place that buy order in the automotive sector!

RallyJon

Reminds me of when our old bank was bragging in their annual report about how much they were making on those random account fees. Moved our checking account, but kept the stock.

Terry Adams

When there is no substitute, it comes down to disposable income.

I wonder what the same magazine would say the Bugatti Veyron is worth.

joey c

more reason to buy a used porsche..for me they are great cars,,,but they have terrible customer care,totally over priced..

jimbo3

I'd be willing to bet that it's not an apples-to-apples margin comparison with other makes. Porsche's number is likely gross margin (1st cost) while VW's is likely after-tax (last cost). VW would not likely survive on a GM of ~1%. Conversely, if Porsche's after-tax profit is 62%, their GM would be in the range of well over 95%, which is also not likely.

For those not versed in business, GM is based on immediate production cost. That is, cost of materials coming into a plant plus the immediate cost of labor and processing. It does NOT include any periferals like development costs, depreciation, facility overhead, taxes, employee benefits, financing costs, marketing functions, administrative functions, etc, etc, etc. Most value-added businesses operate on at least a 40% GM with a few down into the 30's.

last toy

Interesting. You can't degrade a manufacturer if they can achieve such profits while being price competitive and offer a top quality product. That's every CEO's objectives. But is this $28K gross margin or net before taxes. If gross margin, then it is most likey a lot less net considering just their R&D and marketing expenditures. There are many high tech companies that have superb manufacturing processes using lean manufacturing, sigma six practices, etc to keep cost of sales down but expend much more in engineering and design and marketing. As long as there is demand for a $100 k plus car, manufacturers like Porsche will continue to raise the price. I'll bet my car that Audi, BMW, and Mercedes make just as much gross margin on their high end models. I would be more concerned that US companies like Homedepot pay $210 million severance packages to replace a CEO. Now that is very CEO's dream.

Bull

Well put jimbo! I ran a business at one time where if we couldn't get a minimum of 55% GM out of a product line, we dumped it, while the bottom line target was 10%+.

Ty Smith

I'm thinking that's Gross Margin not Net margin. Assuming the ave Retail price is around $100k, a 28% Gross Margin is impressive but not unheard of. I'm certain that auto makers "below the line" cost are extraordinary. That $28k or 28% represents Direct Costs and Direct Labor + factory overheads only . ( as previously stated ) Add on, other Selling, General and Adminstrative costs, Including that CEO comp... and the 28% margin drops significantly.... I'm hoping our beloved Porsche isn't that Greedy.. ..

RallyJon

Not gross margin, NET INCOME before taxes. For the latest fiscal year, Porsche's bottom line was €2.11 billion, on 97,000 cars sold.

Actually my math was wrong. They made $28k per car wholesale. Have to take out the dealer margin first.

And so, for all you CGS aficionados, there's probably only about $20k of materials and labor in a 997.

fast_freddy

If they were overpriced, they would sell far fewer cars than they do now. Whatever the market will bear... As always, in the absence of value price is an issue. Clearly the value is there to the new car buying public. Why should they sell it for less if they can and do sell it for more?

last toy

Than $28k profits on wholesale is even more mind boggling considering what the dealer profit add-on is. No wonder Porsche had enough cash to buy controlling interest in VW. Maybe they should consider buying GM. But then again, Mercedes bought Chrysler and look at their annual financial performance. Still hard to believe it is net.

Ty Smith

Well..... I guess they really are greedy... I guess the production of non hand built cars is extremely profitable... I'm thinking they didn't make anything on my hand built 993...



.

urban_alchemist

Now just go to www.porsche.co.uk and see what they're charging for cars over on our side of the pond (and feel free to spec the car up - our 'standard equipment' is lower than yours).

Then, after you've fallen off your seat, remember that USD:GBP is nearly 2:1...

At least in Israel, what, with 200% tax on new cars, I know I'm getting bent over... but here...

jimbo3

If Porsche's pre-tax margin is really around 50% (I doubt it), then by far the biggest issue isn't how greedy Porsche is, but how the ENTIRE rest of the auto industry refuses to compete and is so miserably mis-managed.