OUCH. WHERE GOETH PORSCHE?
12-30-2004, 04:39 PM
#1
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OUCH. WHERE GOETH PORSCHE?
AUTOEXTREMIST:
America's Fastest Growing Truck Company?
Yeah, Buddy! Speaking of Brand Erosion Hell, despite the high-fiving going on at Porsche headquarters in Zuffenhausen over their eye-opening profit numbers, analysts saw real storm clouds on the horizon and pounded Porsche stock after the company reported results for the first half of its fiscal year. Smugly billing itself as the world's most profitable automaker, Porsche's net profit for the period was $150 million - up 16 percent, largely due to sales of their Cayenne SUV. What analysts didn't like was the fact that 911 sales were off 26 percent, while Boxster sales plummeted even more - down a staggering 44 percent. What it comes down to is that Porsche is painting itself into a corner. After all, Porsche insists it's still predominantly a sports car manufacturer - even though it has been selling more trucks than cars for several months now. So then the question becomes, What is Porsche? And even more than that, what will Porsche stand for in the future? If it now considers itself a diverse maker of cars and trucks, then it will immediately be lumped in with a lot of other automakers around the world who do exactly the same thing. ETC. ETC.....
it will be interesting to see sales numbers for the "new" boxster and 997
PS - half of P's profit is currency hedging
America's Fastest Growing Truck Company?
Yeah, Buddy! Speaking of Brand Erosion Hell, despite the high-fiving going on at Porsche headquarters in Zuffenhausen over their eye-opening profit numbers, analysts saw real storm clouds on the horizon and pounded Porsche stock after the company reported results for the first half of its fiscal year. Smugly billing itself as the world's most profitable automaker, Porsche's net profit for the period was $150 million - up 16 percent, largely due to sales of their Cayenne SUV. What analysts didn't like was the fact that 911 sales were off 26 percent, while Boxster sales plummeted even more - down a staggering 44 percent. What it comes down to is that Porsche is painting itself into a corner. After all, Porsche insists it's still predominantly a sports car manufacturer - even though it has been selling more trucks than cars for several months now. So then the question becomes, What is Porsche? And even more than that, what will Porsche stand for in the future? If it now considers itself a diverse maker of cars and trucks, then it will immediately be lumped in with a lot of other automakers around the world who do exactly the same thing. ETC. ETC.....
it will be interesting to see sales numbers for the "new" boxster and 997
PS - half of P's profit is currency hedging
12-30-2004, 05:35 PM
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It is an interesting situation to observe with the SUV completely outselling the sportscars, and a good bet on the exchange rates giving them a big updraft. That won't last forever, the dollar's decline will likely continue, and it may well remain very undervalued against the basket of currencies for some time to come. That will eventually throw the pendulum back in PAG's face hard, which is why their stock is getting a drubbing now.
However I am certain the only reason the peppervagen is selling so well is because it is a Porsche. I think the redesign of the Boxster is an opportunity lost, IMHO it looks lackluster and too like the previous car, but let's see if it sells. I understand that P are looking to have a 5 platform line up, and that's the extent of the expansion plan into being a full luxury brand. The Boxster, the 911, the A6 based M5 slayer, the MB-AMG SL slayer and the SUV. With these cars they plan to have all the segments of the luxury market covered.
I think the important thing to remember is they are building an aspirational lifestyle product, and are looking to build a luxury brand. I think they can easily achieve this while keeping the Cupcar's, RSR's and their other sporting interests alive. After all, every Cupcar owner has a road car, and an SUV, and the Mrs. likely has a saloon too. I think that their expansion into the fiscally rewarding pastures of luxury is in all honestly true to the brand. After all, going racing is a luxury sport, you gotta have the $$ to do it.
BTW, who will be doing the spannering on the new RS beastie of yours? I have a friend with an old P car, and he was asking me if I knew any really great classic Pcar guys.
However I am certain the only reason the peppervagen is selling so well is because it is a Porsche. I think the redesign of the Boxster is an opportunity lost, IMHO it looks lackluster and too like the previous car, but let's see if it sells. I understand that P are looking to have a 5 platform line up, and that's the extent of the expansion plan into being a full luxury brand. The Boxster, the 911, the A6 based M5 slayer, the MB-AMG SL slayer and the SUV. With these cars they plan to have all the segments of the luxury market covered.
I think the important thing to remember is they are building an aspirational lifestyle product, and are looking to build a luxury brand. I think they can easily achieve this while keeping the Cupcar's, RSR's and their other sporting interests alive. After all, every Cupcar owner has a road car, and an SUV, and the Mrs. likely has a saloon too. I think that their expansion into the fiscally rewarding pastures of luxury is in all honestly true to the brand. After all, going racing is a luxury sport, you gotta have the $$ to do it.
BTW, who will be doing the spannering on the new RS beastie of yours? I have a friend with an old P car, and he was asking me if I knew any really great classic Pcar guys.
12-30-2004, 06:16 PM
#3
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And then there is the issue of the sinking dollar and Porsche's clever way of dealing with it so far:
12/07 DJ WSJ Porsche Powers Profit With Currency Plays
(From THE WALL STREET JOURNAL)
By Stephen Power
Frankfurt -- THE WEAK DOLLAR is denting many European car makers, but Porsche AG may have found a way of using the ailing buck to rev up its results.
Investment analysts believe sophisticated currency bets -- not sports cars like the 911 -- are turbo-charging Porsche's profits. Goldman Sachs, for one, mates that as much as 75% of the company's pretax profits -- or up to 800 million euros ($1.07 billion) of the 1.1 billion euros Porsche reported for the fiscal year that ended July 31 -- came from skillfully executing currency options. Other analysts say that percentage is too high, but most European auto watchers agree that Porsche probably racks up a big chunk of its operating profit from crafty currency plays.
The company declined to make Chief Financial Officer Holger Haerter available to comment on its foreign-exchange profits. A spokesman, Manfred Ayasse, acknowledges that Porsche's hedging generates a profit and is an important part of its overall strategy. Porsche currency exposure is fully hedged through July 31, 2007, and the auto maker is working to extend its protection well beyond that date, he adds. "Fully hedged" refers to taking currency positions that aim to protect all of a company's earnings from movements in the foreign-exchange market, but currency options and other derivatives can also become profit centers depending on how well a company makes its bets.
Without elaborating, Mr. Ayasse says Goldman's estimate of Porsche's currency earnings is "far too high," and "by far the majority" of Porsche's profits come from selling cars.
Among other analysts, Michael Raab at Sal. Oppenheim & Cie. in Frankfurt and Stephen Cheetham at Sanford C. Bernstein in London believe Porsche is getting 40% to 50% of its pretax profit from hedging. Porsche's apparent success in turning a profit while weathering the dollar's dips is rare these days, though auto makers have been able to do so in the past. For example, even as its North American unit struggled last year, DaimlerChrysler AG earned hundreds of millions of euros on currency hedges.
Typically, however, the strong euro makes German cars, French wines or British drugs more expensive for customers who pay in dollars and harms European manufacturers. Among car makers, Volkswagen AG expects a $1.3 billion loss in North America this year, largely as a result of the euro's strength. Ford Motor Co.'s Jaguar unit has cited the dollar's slide as contributing to its decision this year to cut output by 12%. BMW AG and DaimlerChrysler's Mercedes division have been hurt less because, unlike Porsche and Volkswagen, both operate U.S. plants that export cars to Europe, providing a natural hedge against exchange-rate swings.
At late afternoon in New York yesterday, the dollar was trading at $1.347, near its all-time low, against the euro. Pinpointing how much Porsche makes from currency options is difficult, because the family-controlled company reports earnings only twice a year. The company also provides fewer details about its accounting practices than other auto makers. But in its report, Goldman points out that Porsche books hedging profits in the cost-of-materials line in its profit-and-loss statement. The investment bank notes that in fiscal 2002-03 Porsche's raw-material costs fell 7% -- even though the company built 33% more cars than the year before. Goldman says falling development costs and other savings are "insufficient" to generate such a drop.
Porsche won't describe its hedging technique, but Goldman Sachs believes the car maker essentially bets on a weak dollar, by buying from another party -- presumably a bank -- an option to exchange dollars for euros at an artificially low exchange rate for the euro -- for example, 90 U.S. cents to one euro.
If the dollar's value on the open market falls below that level -- to, say, $1.20 for one euro -- Porsche gets a hefty cash payout, Goldman writes. Conversely, if the dollar strengthens, the only losses Porsche incurs are the premiums it has paid for buying those options. Although those premiums are high -- around 2% annually of the total amount Porsche wants to hedge, or $20 million on hypothetical U.S. revenues of $1 billion -- Porsche can afford them, since its profit margins are among the highest in the industry.
Goldman Sachs says Porsche's profit levels are unsustainable. Mr. Cheetham, the Bernstein analyst, agrees. "Hedging is just a short-run thing," he says. Predicting the dollar's swings is critical for Porsche. It makes its cars entirely in Europe, but generates 40% or 45% of its sales in the U.S. During the late 1980s and early 1990s, Porsche made little effort to shield itself from currency effects, raising prices as often as three times a year in response to a weak dollar. The result: Porsche's U.S. sales slid from 30,000 cars in 1986 to 4,500 in 1992.
Mr. Ayasse acknowledges the company raised its prices too often, but says other car makers "made this error, too." "We don't want to see negative surprises in the forthcoming years," he adds.
(END) Dow Jones Newswires
12-07-04 1941ET
12/07 DJ WSJ Porsche Powers Profit With Currency Plays
(From THE WALL STREET JOURNAL)
By Stephen Power
Frankfurt -- THE WEAK DOLLAR is denting many European car makers, but Porsche AG may have found a way of using the ailing buck to rev up its results.
Investment analysts believe sophisticated currency bets -- not sports cars like the 911 -- are turbo-charging Porsche's profits. Goldman Sachs, for one, mates that as much as 75% of the company's pretax profits -- or up to 800 million euros ($1.07 billion) of the 1.1 billion euros Porsche reported for the fiscal year that ended July 31 -- came from skillfully executing currency options. Other analysts say that percentage is too high, but most European auto watchers agree that Porsche probably racks up a big chunk of its operating profit from crafty currency plays.
The company declined to make Chief Financial Officer Holger Haerter available to comment on its foreign-exchange profits. A spokesman, Manfred Ayasse, acknowledges that Porsche's hedging generates a profit and is an important part of its overall strategy. Porsche currency exposure is fully hedged through July 31, 2007, and the auto maker is working to extend its protection well beyond that date, he adds. "Fully hedged" refers to taking currency positions that aim to protect all of a company's earnings from movements in the foreign-exchange market, but currency options and other derivatives can also become profit centers depending on how well a company makes its bets.
Without elaborating, Mr. Ayasse says Goldman's estimate of Porsche's currency earnings is "far too high," and "by far the majority" of Porsche's profits come from selling cars.
Among other analysts, Michael Raab at Sal. Oppenheim & Cie. in Frankfurt and Stephen Cheetham at Sanford C. Bernstein in London believe Porsche is getting 40% to 50% of its pretax profit from hedging. Porsche's apparent success in turning a profit while weathering the dollar's dips is rare these days, though auto makers have been able to do so in the past. For example, even as its North American unit struggled last year, DaimlerChrysler AG earned hundreds of millions of euros on currency hedges.
Typically, however, the strong euro makes German cars, French wines or British drugs more expensive for customers who pay in dollars and harms European manufacturers. Among car makers, Volkswagen AG expects a $1.3 billion loss in North America this year, largely as a result of the euro's strength. Ford Motor Co.'s Jaguar unit has cited the dollar's slide as contributing to its decision this year to cut output by 12%. BMW AG and DaimlerChrysler's Mercedes division have been hurt less because, unlike Porsche and Volkswagen, both operate U.S. plants that export cars to Europe, providing a natural hedge against exchange-rate swings.
At late afternoon in New York yesterday, the dollar was trading at $1.347, near its all-time low, against the euro. Pinpointing how much Porsche makes from currency options is difficult, because the family-controlled company reports earnings only twice a year. The company also provides fewer details about its accounting practices than other auto makers. But in its report, Goldman points out that Porsche books hedging profits in the cost-of-materials line in its profit-and-loss statement. The investment bank notes that in fiscal 2002-03 Porsche's raw-material costs fell 7% -- even though the company built 33% more cars than the year before. Goldman says falling development costs and other savings are "insufficient" to generate such a drop.
Porsche won't describe its hedging technique, but Goldman Sachs believes the car maker essentially bets on a weak dollar, by buying from another party -- presumably a bank -- an option to exchange dollars for euros at an artificially low exchange rate for the euro -- for example, 90 U.S. cents to one euro.
If the dollar's value on the open market falls below that level -- to, say, $1.20 for one euro -- Porsche gets a hefty cash payout, Goldman writes. Conversely, if the dollar strengthens, the only losses Porsche incurs are the premiums it has paid for buying those options. Although those premiums are high -- around 2% annually of the total amount Porsche wants to hedge, or $20 million on hypothetical U.S. revenues of $1 billion -- Porsche can afford them, since its profit margins are among the highest in the industry.
Goldman Sachs says Porsche's profit levels are unsustainable. Mr. Cheetham, the Bernstein analyst, agrees. "Hedging is just a short-run thing," he says. Predicting the dollar's swings is critical for Porsche. It makes its cars entirely in Europe, but generates 40% or 45% of its sales in the U.S. During the late 1980s and early 1990s, Porsche made little effort to shield itself from currency effects, raising prices as often as three times a year in response to a weak dollar. The result: Porsche's U.S. sales slid from 30,000 cars in 1986 to 4,500 in 1992.
Mr. Ayasse acknowledges the company raised its prices too often, but says other car makers "made this error, too." "We don't want to see negative surprises in the forthcoming years," he adds.
(END) Dow Jones Newswires
12-07-04 1941ET
12-30-2004, 06:46 PM
#4
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andrew,
mike schatz is great on aircooled, he just also happens to know modern cars as well. he's the best in LA county...
i have ordered the 997 GT3 and the 4 door sedan.... because their porsches... i hope they're still competitive when they hit. and we'll see how profitable they are if sales stay bad....
it will be interesting to see if my wife will drive a porsche... even if it has 4 doors and is as exculsive and distinctive as her QP.
mike schatz is great on aircooled, he just also happens to know modern cars as well. he's the best in LA county...
i have ordered the 997 GT3 and the 4 door sedan.... because their porsches... i hope they're still competitive when they hit. and we'll see how profitable they are if sales stay bad....
it will be interesting to see if my wife will drive a porsche... even if it has 4 doors and is as exculsive and distinctive as her QP.
12-31-2004, 01:07 PM
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Originally Posted by Sammamish
Watt, is "QP" Maserati QP? Do you have any details you can share on the 4 door sedan?
http://www.rennteam.com/showflat.php...2&fpart=1&vc=1
this thread is hilarious:
http://ferrarichat.com/forum/showthr...9&page=3&pp=20
the buzz about the auto shift not working is incorrect, it works great in stop and go. she uses sport and manual on the mountain, then goes to to auto, no sport on freeway.
the car is superb.
12-31-2004, 04:15 PM
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Maybe that explains why during my visit to the Bay Area and Tahoe last week I only saw one 996 (a Polar Silver, parked near Union Square). Yet I saw a bunch of Cayennes at both places. The Cayennes (6 cyl, S, and T) seemed to be everywhere.
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12-31-2004, 05:58 PM
#8
Originally Posted by nicoff
Maybe that explains why during my visit to the Bay Area and Tahoe last week I only saw one 996 (a Polar Silver, parked near Union Square). Yet I saw a bunch of Cayennes at both places. The Cayennes (6 cyl, S, and T) seemed to be everywhere.
12-31-2004, 06:44 PM
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Last week I spent two days in SF and it was not raining. I saw the 996 then as well as numerous Cayenes. In Tahoe there was no rain/snow, I saw no 996 and several Cayenes. I returned to the Bay Area this past Sunday and stayed until yesterday (Thursday). It rained almost all week. Cayennes were out on the road, but no 996 (I did see one Boxster, now I recall).
01-01-2005, 08:05 PM
#10
Come back after the rainy season and 996's will be everywhere in SF.
01-02-2005, 04:57 PM
#11
Watt, in defense of the Cayenne ...
It might just be the most solid "truck" ever made. It is awesome offroad and in the snow (as I found out over the holidays in Utah.) It is a freaking snowmobile on ice. Last year in the spring I got to drive it at the Porsche proving grounds offroad (attached photo) and it rocks! Although I would never take mine offroad and then back on the highway to 140MPH.
It might just be the most solid "truck" ever made. It is awesome offroad and in the snow (as I found out over the holidays in Utah.) It is a freaking snowmobile on ice. Last year in the spring I got to drive it at the Porsche proving grounds offroad (attached photo) and it rocks! Although I would never take mine offroad and then back on the highway to 140MPH.
01-06-2005, 12:32 PM
#12
Rennlist Member
Nobody I know with a Cayenne ever even takes it off road. Can you imagine the resale value of one that actually had the capabilities of the chassis exploited?
I used to do a lot of off road stuff in 4 WD and Meyers Manx cars when I was a kid and believe me it really takes a toll on the hardware, particularly the paint.
I would like to see the response when a Cayenne comes into a dealership in trade with dents, scratches, undercarriage all dirty with rock dents on the skid pans....and mud ground into the leather and carpets inside.
An Audi Quattro would satisfy the real needs of most for daily 4 wheel drive in snow and ice.
A lift kit on the Audi would perhaps satisfy the need to appear tall and intimidating to other cars.
I wonder how long a business model can be based on a vehicle that makes no sense at all in reality.
I used to do a lot of off road stuff in 4 WD and Meyers Manx cars when I was a kid and believe me it really takes a toll on the hardware, particularly the paint.
I would like to see the response when a Cayenne comes into a dealership in trade with dents, scratches, undercarriage all dirty with rock dents on the skid pans....and mud ground into the leather and carpets inside.
An Audi Quattro would satisfy the real needs of most for daily 4 wheel drive in snow and ice.
A lift kit on the Audi would perhaps satisfy the need to appear tall and intimidating to other cars.
I wonder how long a business model can be based on a vehicle that makes no sense at all in reality.
01-06-2005, 01:04 PM
#13
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"I wonder how long a business model can be based on a vehicle that makes no sense at all in reality."
What kind of watch to do you wear?
Do you race a car? What kind of reality is car racing?
If all purchases were based on simple logic, then we'd all have the same toasters! Thank god we're not dominated by one person's simple logic.
What kind of watch to do you wear?
Do you race a car? What kind of reality is car racing?
If all purchases were based on simple logic, then we'd all have the same toasters! Thank god we're not dominated by one person's simple logic.
01-06-2005, 01:34 PM
#14
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The watch(es) I wear and the car I autocross are much closer to the realistic needs of their duty cycle than a Cayenne is to a California freeway.
01-06-2005, 03:31 PM
#15
Originally Posted by Cupcar
Nobody I know with a Cayenne ever even takes it off road. Can you imagine the resale value of one that actually had the capabilities of the chassis exploited?
I used to do a lot of off road stuff in 4 WD and Meyers Manx cars when I was a kid and believe me it really takes a toll on the hardware, particularly the paint.
I would like to see the response when a Cayenne comes into a dealership in trade with dents, scratches, undercarriage all dirty with rock dents on the skid pans....and mud ground into the leather and carpets inside.
An Audi Quattro would satisfy the real needs of most for daily 4 wheel drive in snow and ice.
A lift kit on the Audi would perhaps satisfy the need to appear tall and intimidating to other cars.
I wonder how long a business model can be based on a vehicle that makes no sense at all in reality.
I used to do a lot of off road stuff in 4 WD and Meyers Manx cars when I was a kid and believe me it really takes a toll on the hardware, particularly the paint.
I would like to see the response when a Cayenne comes into a dealership in trade with dents, scratches, undercarriage all dirty with rock dents on the skid pans....and mud ground into the leather and carpets inside.
An Audi Quattro would satisfy the real needs of most for daily 4 wheel drive in snow and ice.
A lift kit on the Audi would perhaps satisfy the need to appear tall and intimidating to other cars.
I wonder how long a business model can be based on a vehicle that makes no sense at all in reality.
BTW I take my 4runner off-road, it's a great "inexpensive" way to have some serious fun and no need to worry about scratches, etc.
http://www.robbygordon.com/
