Even more profits for Porsche AG, still no race program
09-10-2003, 09:54 PM
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Even more profits for Porsche AG, still no race program
In today's WSJ:
Porsche AG yesterday released preliminary figures for the fiscal year ended July 31
Revenue jumped 15% while vehicle sales rose 23%
Vehicle sales for for the core 911 and Boxster fell to 46,200 units from 54, 234. Cayenne sales amounted to 20,603 vehicles.
"Although it hasn't yet given a profit figure, pretax profit 'rose significantly'"
This is on top of the record profits PAG bragged about last year.
So the Cayenne had the desired effect.
It made the company more profitable. It kept the company independent. It has smoothed out the sportscar buying cycle, even more than the strategists could have ever hoped.
But four years ago, the promise was that after the Cayenne was launched, Porsche would return to world class racing.
It's time, Porsche. It's time.
Porsche AG yesterday released preliminary figures for the fiscal year ended July 31
Revenue jumped 15% while vehicle sales rose 23%
Vehicle sales for for the core 911 and Boxster fell to 46,200 units from 54, 234. Cayenne sales amounted to 20,603 vehicles.
"Although it hasn't yet given a profit figure, pretax profit 'rose significantly'"
This is on top of the record profits PAG bragged about last year.
So the Cayenne had the desired effect.
It made the company more profitable. It kept the company independent. It has smoothed out the sportscar buying cycle, even more than the strategists could have ever hoped.
But four years ago, the promise was that after the Cayenne was launched, Porsche would return to world class racing.
It's time, Porsche. It's time.
09-11-2003, 09:57 AM
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I'm afraid it's never gonna happen...
No matter how much they sell and no matter how much BS (about when it's gonna happen etc.) flows from Dr. W's mouth...
No matter how much they sell and no matter how much BS (about when it's gonna happen etc.) flows from Dr. W's mouth...
09-11-2003, 12:09 PM
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I think you're right, Finn, at least for the foreseeable future. Porsche predicts flat revenue and profits for the future, so if they can't find a way to get a factory team into top flight racing while the profits and revenues are fat right now, they surely won't be able to to do it in the next two years when revenues are flat to lower. Even assuming the new 997 and Boxster releases are successful, they won't see full profits from that until 2006.
Wall Street Journal European Business News
Porsche Expects Profit
To Slow Down in 2004
Car Maker's Recent Successes to Reverse
Course as Boxster and 911 Models Slump
FRANKFURT -- Porsche AG, which has soldiered on despite the auto industry's two-year slump, is finally starting to feel the pinch.
The German sports-car maker said Wednesday it expects little profit growth in the fiscal year ending next July 31, possibly ending a run of growth dating to the early 1990s.
In a preliminary earnings report Tuesday, the Stuttgart-based company said sales for the year that ended July 31 rose 15% to €5.6 billion ($6.22 billion), while pretax profit rose "significantly."
Porsche has had to manage a steep drop in demand for its aging core sports cars, the two-seat Boxster and the flagship 911. Through the first eight months of 2003, combined sales of those models in the U.S. have dropped 22% to 10,526, including a 30% drop in August.
So far this year, Boxster and 911 declines have been more than offset by Porsche's new sport-utility vehicle, the Cayenne, which went on sale earlier this year. Porsche has sold 7,515 Cayennes in the U.S. so far this year, enough to lift its total U.S. unit sales 16% to 18,041.
But the company is preparing for more big drops in Boxster sales next year, declines the Cayenne might not be able to offset. For the 2004 Boxster, Porsche is preparing to cut production as much as 50%, two people familiar with its output plans said.
"Most certainly 2004 is going to be a difficult year for them," said Michael Raab, an analyst at Sal. Oppenheim & Cie. in Frankfurt.
In an interview at the Frankfurt auto show, Chief Executive Wendelin Wiedeking acknowledged Porsche will build significantly fewer 2004 Boxsters than it did for the 2003 model year but declined to elaborate.
"It's fully logical that a car that has been eight years in the market will sell substantially less," he said.
If the Cayenne isn't able to keep sales on the rise, it will mark a setback in the company's strategy to expand beyond sports cars and add a third product line to even out cyclical sales.
Mr. Raab said the strategy was correct in theory, but Porsche still has to show that the Cayenne can pull in more than just an initial wave of Porsche fans. "The Cayenne has done pretty well so far, but it's too early to say it will be a long-term success," he said.
In perhaps the strongest sign of softening demand, Porsche is trying a limited form of the discounting tactics that downmarket rivals such as Ford Motor Co. and General Motors Corp. have used to prop up sales. In the past few months, the company has quietly begun offering rebates to current Porsche owners who buy new 911s or Boxsters, a tactic it had shunned in the past.
People familiar with the program said Porsche's North American unit is offering rebates of about $3,000 (€2,673) in letters to current owners. Mr. Wiedeking said the rebates are part of a loyalty program, but said he isn't familiar with the details.
"Up to last December, we were selling like gangbusters, and then it started to slow down three months ago," said Amin Rahemtulla, sales manager at Sonnen Porsche in California's affluent Marin County. But to clear inventory, Mr. Rahemtulla has had to discount cars $2,500 or more.
Updated September 11, 2003
Wall Street Journal European Business News
Porsche Expects Profit
To Slow Down in 2004
Car Maker's Recent Successes to Reverse
Course as Boxster and 911 Models Slump
FRANKFURT -- Porsche AG, which has soldiered on despite the auto industry's two-year slump, is finally starting to feel the pinch.
The German sports-car maker said Wednesday it expects little profit growth in the fiscal year ending next July 31, possibly ending a run of growth dating to the early 1990s.
In a preliminary earnings report Tuesday, the Stuttgart-based company said sales for the year that ended July 31 rose 15% to €5.6 billion ($6.22 billion), while pretax profit rose "significantly."
Porsche has had to manage a steep drop in demand for its aging core sports cars, the two-seat Boxster and the flagship 911. Through the first eight months of 2003, combined sales of those models in the U.S. have dropped 22% to 10,526, including a 30% drop in August.
So far this year, Boxster and 911 declines have been more than offset by Porsche's new sport-utility vehicle, the Cayenne, which went on sale earlier this year. Porsche has sold 7,515 Cayennes in the U.S. so far this year, enough to lift its total U.S. unit sales 16% to 18,041.
But the company is preparing for more big drops in Boxster sales next year, declines the Cayenne might not be able to offset. For the 2004 Boxster, Porsche is preparing to cut production as much as 50%, two people familiar with its output plans said.
"Most certainly 2004 is going to be a difficult year for them," said Michael Raab, an analyst at Sal. Oppenheim & Cie. in Frankfurt.
In an interview at the Frankfurt auto show, Chief Executive Wendelin Wiedeking acknowledged Porsche will build significantly fewer 2004 Boxsters than it did for the 2003 model year but declined to elaborate.
"It's fully logical that a car that has been eight years in the market will sell substantially less," he said.
If the Cayenne isn't able to keep sales on the rise, it will mark a setback in the company's strategy to expand beyond sports cars and add a third product line to even out cyclical sales.
Mr. Raab said the strategy was correct in theory, but Porsche still has to show that the Cayenne can pull in more than just an initial wave of Porsche fans. "The Cayenne has done pretty well so far, but it's too early to say it will be a long-term success," he said.
In perhaps the strongest sign of softening demand, Porsche is trying a limited form of the discounting tactics that downmarket rivals such as Ford Motor Co. and General Motors Corp. have used to prop up sales. In the past few months, the company has quietly begun offering rebates to current Porsche owners who buy new 911s or Boxsters, a tactic it had shunned in the past.
People familiar with the program said Porsche's North American unit is offering rebates of about $3,000 (€2,673) in letters to current owners. Mr. Wiedeking said the rebates are part of a loyalty program, but said he isn't familiar with the details.
"Up to last December, we were selling like gangbusters, and then it started to slow down three months ago," said Amin Rahemtulla, sales manager at Sonnen Porsche in California's affluent Marin County. But to clear inventory, Mr. Rahemtulla has had to discount cars $2,500 or more.
Updated September 11, 2003
09-11-2003, 12:35 PM
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Well, from a business standpoint, the Cayenne achieved exactly what Porsche wanted: Portfolio diversification and reduced exposure to the sportscar market. In May 2003, Porsche sold 3,008 Cayennes, reflecting 46% of total unit sales for the month (Sept. 2003 Motortrend).
I think Porsche is trying to ride out those years of goodwill and brand equity built through direct investment, hoping that privateers will continue the brand exposure. One cannot but ask the question:
From a marketing standpoint, does it matter whether a Porsche race car is factory backed or run by a privateer? Will consumers care if the winning Porsche is privately run, as long as its a Porsche? Also, how closely correlated is winning and participating vs. sales?
We all now that the race on Sunday, sell on Monday maxim is now outdated. In fact, what we're seeing happening is mfrs using a sub-brand such as AMG, M or SVT to create the performance halo effect. Lamborghini still sells cars even though it hasn't done any racing.
I think Porsche is trying to ride out those years of goodwill and brand equity built through direct investment, hoping that privateers will continue the brand exposure. One cannot but ask the question:
From a marketing standpoint, does it matter whether a Porsche race car is factory backed or run by a privateer? Will consumers care if the winning Porsche is privately run, as long as its a Porsche? Also, how closely correlated is winning and participating vs. sales?
We all now that the race on Sunday, sell on Monday maxim is now outdated. In fact, what we're seeing happening is mfrs using a sub-brand such as AMG, M or SVT to create the performance halo effect. Lamborghini still sells cars even though it hasn't done any racing.
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09-11-2003, 01:58 PM
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Top flight racing absolutely, positively always was a part of modern Porsche's DNA. Porsche was considered different solely because of its dilligence in pursuing and achieving race wins. That diligence was undertaken not because the bean counters and marketers demonstrated a direct link between race wins and sales, but because it energized the company and its engineers, created incredible cache for the marque, achieved useful technical innovations, and because Messrs. Porsche wanted to race.
Stats borrowed from another poster ...
Starting in 1960 and stretching for 40 consecutive years, a Porsche finished in the top 10 overall at Le Mans. Between 1968 and 1998 (inclusive), a Porsche powered car finished on the overall podium at Le Mans in 26 of 31 years (84%). During that same period, a Porsche occupied 51 of 93 overall podium spots (55%). Between 1970 and 1998 (inclusive), a Porsche finished first overall at Le Mans in 16 of 29 years (55%). Since 1998, not a single Porsche has finished on the overall podium at Le Mans.
BTW, regarding your Lamborghini reference, Lamborghini just announced a race version of the Murcielago, the R-GT. Looks pretty awesome.
Stats borrowed from another poster ...
Starting in 1960 and stretching for 40 consecutive years, a Porsche finished in the top 10 overall at Le Mans. Between 1968 and 1998 (inclusive), a Porsche powered car finished on the overall podium at Le Mans in 26 of 31 years (84%). During that same period, a Porsche occupied 51 of 93 overall podium spots (55%). Between 1970 and 1998 (inclusive), a Porsche finished first overall at Le Mans in 16 of 29 years (55%). Since 1998, not a single Porsche has finished on the overall podium at Le Mans.
BTW, regarding your Lamborghini reference, Lamborghini just announced a race version of the Murcielago, the R-GT. Looks pretty awesome.
09-11-2003, 09:25 PM
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On a slightly unrelated topic, recent articles in British mags have suggested that the heavily redesigned 998 would be ready for 2005, but won't be released until 2007 so that they can get some more "mileage" (money) out of a lightly made-over version of the current 911 - the "997".
Maybe another good business decision, but I certainly won't be partaking in the 997 party. Oh well, more time to invest the money - unless one of ya'll hears of a nice 993 cup car and I follow in the evil footsteps of Kim, Greg,....
Maybe another good business decision, but I certainly won't be partaking in the 997 party. Oh well, more time to invest the money - unless one of ya'll hears of a nice 993 cup car and I follow in the evil footsteps of Kim, Greg,....
09-12-2003, 01:06 PM
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Todd, I agree, those stats are impressive. One way to look at the racing issue is whether it rates as an objective of the bean counters and the marketers, another way to look at it is whether it has been and should be an essential (indispensable) pursuit of the company, yielding both tangible and intangible benefits and characteristics that coalesce to form a unique identity. Otherwise, life competing to be another BMW or Mercedes in the greater market will most assuredly end in tragedy for WW. (How's that for melodrama?).
Receding into the past are the days of the public and enthusiasts regarding Porsche and its race engineers as brilliant wizards and gnomes possessing unrivaled race engineering intelligence and working feverishly in Weissach and Zuffenhausen to out-do their competitors. I'd have to say that the wizards at Audi, McLaren and Ferrari are the most fearsome race engineers right now. Porsche does okay with its GT3RS in racing, but it doesn't carry the cache or engineering respect, or yield class-leading innovations, that top flight racing success does.
Just my two cents.
I've had a busy end-of-summer, but I'm going to try to get a meeting arranged for later in October
Receding into the past are the days of the public and enthusiasts regarding Porsche and its race engineers as brilliant wizards and gnomes possessing unrivaled race engineering intelligence and working feverishly in Weissach and Zuffenhausen to out-do their competitors. I'd have to say that the wizards at Audi, McLaren and Ferrari are the most fearsome race engineers right now. Porsche does okay with its GT3RS in racing, but it doesn't carry the cache or engineering respect, or yield class-leading innovations, that top flight racing success does.
Just my two cents.
I've had a busy end-of-summer, but I'm going to try to get a meeting arranged for later in October
