Is porsche pushing it ?
08-12-2003, 11:27 AM
#1
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Is porsche pushing it ?
from the NYT:
>produced 911 GT3, of which Porsche will build up to 300 units at a
> > retail price of 125,000, earns Porsche an operating profit of
> > 50,000 per car.
Wow ! Talk about a profit margin. Doesn't make wanna buy a 996. I am all for porsche making money and remaining independant, but that kind of profit margin is sick ! Can you feel your pants drop as you sign the check ? Do they supply vaseline?
After the huge depreciation I saw on my boxster, this reinforces my decision to NEVER again buy a new porsche. 1/2 year old used is good !!! Let someone else pay for the gouging!
Are those standard margins in the auto industry ? I don't think so ! Either way I think it is a bad move to advertise it.
>produced 911 GT3, of which Porsche will build up to 300 units at a
> > retail price of 125,000, earns Porsche an operating profit of
> > 50,000 per car.
Wow ! Talk about a profit margin. Doesn't make wanna buy a 996. I am all for porsche making money and remaining independant, but that kind of profit margin is sick ! Can you feel your pants drop as you sign the check ? Do they supply vaseline?
After the huge depreciation I saw on my boxster, this reinforces my decision to NEVER again buy a new porsche. 1/2 year old used is good !!! Let someone else pay for the gouging!
Are those standard margins in the auto industry ? I don't think so ! Either way I think it is a bad move to advertise it.
08-12-2003, 11:33 AM
#2
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This must be the GT3RS, not GT3 and they are doing 200, not 300 of them (well NYT hasn't been that accurate lately anyway...).
They could probably charge 200 000 for these things and they'd sell because it's such a limited production and many people will but them for just collector's pieces and hope 30 years from now it will cost quite a bit more than what ity did when it was first sold.
I agree generally about their profit margin, it's high and I think you can see it from their products vs. price.
They could probably charge 200 000 for these things and they'd sell because it's such a limited production and many people will but them for just collector's pieces and hope 30 years from now it will cost quite a bit more than what ity did when it was first sold.
I agree generally about their profit margin, it's high and I think you can see it from their products vs. price.
08-12-2003, 11:56 AM
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Goes back to basic economics of supply, demand, and willingness-to-pay.
I hate being on the receiving end but as every capitalist knows, you charge as much as the market can bear. You think those margins obscene, consider margins in the pharma industry or worse, software (let's see $199 for windows XP, $0.00 to replicate code, $5.00 for marketing,...) I'm not happy with the high Porsche margins but at least I still have a choice to go elsewhere. Can't say the same for Microsoft products...
As Graham pointed out, you're also paying for the intellectual property embedded in the product which is harder to cost out on a per-product basis.
As for me, I'll keep on buying them used at let someone else take the depreciation hit, even for the "collector" versions.
I hate being on the receiving end but as every capitalist knows, you charge as much as the market can bear. You think those margins obscene, consider margins in the pharma industry or worse, software (let's see $199 for windows XP, $0.00 to replicate code, $5.00 for marketing,...) I'm not happy with the high Porsche margins but at least I still have a choice to go elsewhere. Can't say the same for Microsoft products...
As Graham pointed out, you're also paying for the intellectual property embedded in the product which is harder to cost out on a per-product basis.
As for me, I'll keep on buying them used at let someone else take the depreciation hit, even for the "collector" versions.
08-12-2003, 12:12 PM
#7
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I guess my point wasn't clear... I don't care about what they charge... I am questioning the wisdom of them advertising such high profit margins!
"Hey look, we're making a 30% profit on your car" !
I am not in a position to pay that kind of money for a car anyway, but if somehow I struggled to buy a new C4S for $80,000+, I'd be annoyed to learn that the car cost porsche $50K and they are charging 30K profit ? (total guesstimate).. I dunno, maybe it's just me but if you are going to gouge yourself at my expense I'd rather not know - keep the illusion going ! Can't be good for resale value... That GT3 was just an example, I know it'll retain value because it's rare, but I question the wisdom of advertising how much profit you make on selling your cars.
Does anybody know the profit margins in the auto industry - say for german carmakers ? I bet they're higher than Ford's! ;-)
Once again I am not impressed by the price, I am shocked at how big their profit is ! I guess the cayenne must have cost a bundle to develop if they make that kinda money and still cannot afford to go racing!
"Hey look, we're making a 30% profit on your car" !
I am not in a position to pay that kind of money for a car anyway, but if somehow I struggled to buy a new C4S for $80,000+, I'd be annoyed to learn that the car cost porsche $50K and they are charging 30K profit ? (total guesstimate).. I dunno, maybe it's just me but if you are going to gouge yourself at my expense I'd rather not know - keep the illusion going ! Can't be good for resale value... That GT3 was just an example, I know it'll retain value because it's rare, but I question the wisdom of advertising how much profit you make on selling your cars.
Does anybody know the profit margins in the auto industry - say for german carmakers ? I bet they're higher than Ford's! ;-)
Once again I am not impressed by the price, I am shocked at how big their profit is ! I guess the cayenne must have cost a bundle to develop if they make that kinda money and still cannot afford to go racing!
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08-12-2003, 12:18 PM
#8
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I am questioning the wisdom of advertising such high profit margins?
08-12-2003, 12:28 PM
#9
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I don't recall the exact numbers, but in the past there have certainly been articles talking about/estimating the margins on Big Three profit margins on big SUV's and large pickups. I seem to remember gross margin in the 30% range on these vehicles.
That having been said, not a real fan of gouging. However to be fair to the car companies (ahh!), they need to make the money somewhere. Using Ford as an example, I'm sure the margins are razor thin on Taurus' and fat on Lincoln Navigators.
That having been said, not a real fan of gouging. However to be fair to the car companies (ahh!), they need to make the money somewhere. Using Ford as an example, I'm sure the margins are razor thin on Taurus' and fat on Lincoln Navigators.
08-12-2003, 12:42 PM
#10
Why is this different than a movie theater charging $3.50 for a small popcorn? What’s the profit margin there? If people are willing to pay $3.50 for 10 cents worth of popcorn, that’s how much they are gonna charge.
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08-12-2003, 01:42 PM
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I think the GT3 lists for $99k - so I'm not sure what the article is referring to. I also think it's a pretty good value at that price. Take a C4S and option it up with the x50 power kit and other GT3 goodies and you get way over $100k very quickly.
If you'd like to really get sick to your stomach - go to the "car configuror" on www.porsche.com, select a Boxster S and really option it out - you can get over $80k fairly quickly.
If you'd like to really get sick to your stomach - go to the "car configuror" on www.porsche.com, select a Boxster S and really option it out - you can get over $80k fairly quickly.
08-12-2003, 01:42 PM
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I would be REALLY surprised if Porsche was earning 40% operating margins on its 911s like that quote indicates. Where's that from??
As a reference point, Ibbotson Associates shows that the composite operating margins for SIC code 3711 (basically GM and Ford) was 15.5% for the past 5 years, and 12.8% last year. 40% operating profit would be unheard of in about any industry, including pharma.
As a reference point, Ibbotson Associates shows that the composite operating margins for SIC code 3711 (basically GM and Ford) was 15.5% for the past 5 years, and 12.8% last year. 40% operating profit would be unheard of in about any industry, including pharma.
08-12-2003, 02:01 PM
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All I know is if I could make that kind of profit selling something as long as it was legal, you bet your a$$ I would 
Besides any high dollar Item car or not alway has a major profit margin other wise why would a company (or anyone) invest so much money & take such a high risk!!!! How much money do you think the developer my on the house your living in??? I'll bet more the $50K!!
Besides any high dollar Item car or not alway has a major profit margin other wise why would a company (or anyone) invest so much money & take such a high risk!!!! How much money do you think the developer my on the house your living in??? I'll bet more the $50K!!
08-12-2003, 02:09 PM
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The SIC code is industry wide, not just GM and Ford. For the first six months of 2003, the Big Three market share in the US was 49.6%, excluding fleet sales (http://www.workopolis.com/servlet/Co...?section=Sales)
Therefore, 15.5% is industry average, not Big Three average.
I think the reporter probably meant gross profit, not operating profit (which factors in SG&A, R&D, etc.). For comparison, according to Pfizer's and Microsoft's recent financial statements, each company enjoyed a GP of 88% and 81%, respectively, and a operating profit/EBIT of around 38% and 40%, respectively. So, a 50K GP from a 125K car (40% GP) doesn't seem so bad in relative terms.
Therefore, 15.5% is industry average, not Big Three average.
I think the reporter probably meant gross profit, not operating profit (which factors in SG&A, R&D, etc.). For comparison, according to Pfizer's and Microsoft's recent financial statements, each company enjoyed a GP of 88% and 81%, respectively, and a operating profit/EBIT of around 38% and 40%, respectively. So, a 50K GP from a 125K car (40% GP) doesn't seem so bad in relative terms.
08-12-2003, 02:15 PM
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When I bought my Ford Expedition in 1998 I remember reading a story in the WSJ that the profit for Ford (for Expeditions) was $10k/vehicle. Not bad for a mid-$30k sticker price.