Quadcammer

evidence?

Quadcammer

huh...interesting

Bruce In Philly

Porsche has always had the reputation of making the biggest profit per car than any other maker. This was touted even before the Cayenne. When you look at value and total profit, it is not the sports cars that bring in the most money. They make more money on each car than any other car company in the world... period.

Porsche Pockets $17,250 Profit on Every Car

https://www.bloomberg.com/news/artic...s-up-to-17-250

Peace
Bruce in Philly

SpeedyD

Interesting. I thought that collaboration with VW and some other outside support was necessary to keep Porsche from insolvency as near as the 90s, and further support from even more recently that kept them from the brink of financial ruin.

I also thought that perhaps the $17.3k/car number was someone doing some very simple math, like total profit divided by total vehicles sold. I guess it is indeed the exact amount of money they pocket on "Every Car".

SpeedyD

You are able to read, correct? Is there anything contradictory?

Try this for a moment. Imagine a situation without the SUVs being produced with support from VW (sharing the investment). So effectively taking away 80% of Porsche volume.

Now imagine the same amount of investment being made in the 911 and other sports cars. Now divide the total investment (required for the sports cars to be competitive) plus individual cost per vehicle (x vehicles) by the total vehicles produced.

Do you think you will get anywhere near $17k/vehicle? If you do, I hope that you don't run a business.

The fact is that without the SUVs and Panameras to spread out the total investments, Porsche would not be nearly (not even in the same ballpark) as profitable as they are today. If they were just making 911s and all else was equal (same requirements to compete on basis of performance and quality as today) they would be making maybe a few thousand per car, if that.

To yield similar margins they would need to be able to command much higher prices, more like Ferrari level pricing, to get anywhere near the same per unit profitability as they can today.

Quadcammer

wow....ok bud, I'm done here.

SpeedyD

Funny, I think that sustained high speeds in excess of 150mph is actually pushing limits. Race cars are designed for limited sustained high performance excursions and then fully or partially rebuilt, and monitored by teams of engineers. The ability to run for years while being driven at high speeds on a regular basis, with the expectation of not requiring a rebuild, is actually quite impressive.

Also, you cite a speed limited 155mph. Ever consider why only some manufacturers have those in place when their cars can technically exceed those speeds? While Porsche 911s do not?

fast1

The following is from a Forbes article written in February, 2002, which is before Porsche SUV models were introduced.

To the outside world, Porsche retains the mystique of its past: a stable of proud engineers hand-building masterpieces and not always being very attentive to profit. But under the skin, it has become a modern car company--meaning that it outsources everything it can get away with. Suppliers now manufacture at least 75% of every Porsche.

Has Porsche sold its soul? Rivals hope that the public will think so, but so far the financial results show that Porsche has been able to maintain its image while it overhauls its manufacturing methods. In the fiscal year that ended last July, Porsche's net earnings rose 29%, to $237 million, on revenue that climbed 12.1%, to $3.9 billion. This net margin of 6.1% put Porsche in a league of its own; the industry average (as tracked by Value Line) was 1.9% last year. Even the classy BMW netted only 2.9% in its latest fiscal year.

Porsche made some mighty profits on each of the 55,000 cars it sold last year. On the 911 Turbo, which starts at $111,000, the company makes an average gross margin of 45%, according to Merrill Lynch. On the lower-end Boxster S convertible (starting at $43,000), Porsche pulls in a still-rich 23%. If Wiedeking is to be believed, a new 330kph sports car, the Carrera GT, will be profitable from its first sale next year. Price tag on that one: $350,000 to $400,000. Now, each Porsche sold is pure sports car.

lmaternick

I don't have a source to offer nor do I know if it is true in this case (I suspect it is true) but many car companies have survived a downfall and even thrived from volume sales of a popular model. Chrysler with the gen 1 minivan, and maybe even Ford with it's early Mustang. All of these numbers get crunched to come up with a profit/vehicle number. My bet is that the profit margin for the Ford GT is less than the F150. Could be wrong.

Bruce In Philly

Interesting read from Bob Lutz..... But this relates to big, big monster companies where the performance car is not their real business.

https://www.roadandtrack.com/car-cul...november-2017/

Peace
Bruce in Philly

fast1

The demand for halo cars always exceed the number that are built. The reason is that halo cars attract investors in addition to those who want the car to drive. For example next time you visit your Porsche dealer, tell him that you want to order a 992 GT3 and are willing to pay MSRP. There's a virtual 100% certainty that you will not be able to buy the car. The same applies to the GT3RS, GT2, GT2RS or even a 911R. On the other end of the spectrum in the Porsche world will be vehicles like the Macan or Cayenne. Since Porsche appreciates the demand for its halo cars, it realizes that it has the flexibility to charge premium prices. Hence, the 45%+ profit margins on these cars. Of course the total contribution to the bottom line for these halo cars is small because Porsche makes so few of them.
As far as the Ford GT you reference, it falls into the same category. Small number being built, and relatively huge demand. Here's an excerpt from a Bloomberg article:

After nearly 11,000 people expressed interest in buying a GT, Detroit's second-largest automaker received 6,506 completed applications from people across the planet. And 32% of those applications were completed in the six days before the opportunity came to an end -- procrastinate much, world? Some applicants even sent in videos -- some professional-caliber, and some shot with the nearest smartphone -- to try to improve their odds.
But, alas, out of those 6,506 applicants, only a small fraction will be able to purchase the vehicle; about 6,000 will instead receive a rejection letter – which, personally, I'd probably frame anyway. While those 500 GTs will generate roughly $200 million in revenue for Ford...

Couldn't find the profit margin for Ford, but since the car has a base MSRP of $450K, a dealer will make at least $50K for every car sold even without an ADM.

Bruce In Philly

I just want to add...... if any of our readers here are "proud" seeing that Porsche, being the most profitable car company (even before the Cayenne/Panamera when they just had Boxsters and 911s), you may want to think again. Given that Porsche is massively profitable on a per car basis.... what exactly are you getting for that premium? Um... the opposite of value... An always false assumption I pick up, is that our cars have a high cost because of all the high-engineering in them... BS... We are all handing over $17K to the company .... for what again?

Another item..... it is true that American car companies were poorly run in the '70s in that management made decisions to achieve short-term gains (by cheapening the product, they tarnish the brand for long term loyalty). Something you can do if you are only three car companies... behaving like a monopoly. Then it all crashed with foreign competition from Japan ignited by the gas crisis. So it is still in our brains, at least for some here, that "car companies don;t make much profit per car". This was true for the USA car companies. IIRC, GM actually lost money selling cars on a per unit basis, but made money in the financing side. That was f'd up and not sustainable.

Lastly, I believe Porsche's days being the most profitable on a per car basis are numbered. If their desire is "growth", and it appears it is... this is the most important issue for any publicly traded company.. actually profit growth. Then they will be a victim of their own success. The global market is being inundated with higher priced, premium product, it will have a limit in size relative to the whole, and growth will and has come from product expansion. Porsche could not grow at the pace demanded by stock holders as just a sports car company. So... as they move into more competitive markets, they are naturally going to have a regression to the mean driven by market forces. It will happen. When? I dunno.

BTW... if you had to choose... would you rather own one, very high-priced, high-praised restaurant, or two million profitable burger joints? I believe Porsche is aiming for one million, higher-priced, burger joints.

Peace
Bruce in Philly

Fahrer

One should not assume that the reported ( calculated) marginper car is accurate as not all of Porsche's profits come from producing and selling cars. They also do design work for other companies. Still their actual margins per car are quite high, I am sure. The reason Porsche had to get into SUVs and sedans is that they were in the precarious position of producing sports cars only. That business is extremely cyclical. They could have a good run of profitable years followed by a few disastrously (nearly fatally) unprofitable years. Getting into SUVs provided more financial stability for the company. One might think that as Porsche is now under the VW umbrella, Porsche would no longer need to sell SUVs or sedans but the parent company wants to leverage the Porsche name to sell many more profitable cars ( SUVs, sedans). So more and more, Porsche will become known as just another premium brand like BMW, Mercedes, Lexus and Audi, selling expensive SUVs and sedans.

Oh, and by the way, they make sports cars too.

lmaternick

So are supercars reliable? Again I think Porsches are expensive cars, not supercars. I put the GT and the 918 into the supercar realm due to their innovation and exclusivity in terms of R+D costs versus production numbers. GT2 is also a supercar in my mind but only because you can't get one. A Turbo and enough aftermarket stuff would come close...maybe surpass. GT3RS is my sweet spot and I love them but they are really a tuned GT3 or highly tuned 911. Not super but super cool to those who can appreciate polishing a gem.
That said I am in the maintenance period of my 997. It has been well taken care of but it is 13 years old and needs some financial input. I have the maintenance records for the cars lifetime and I can tell you it has been very reliable. The original purchaser took a big hit in the pocket book as is pretty normal, The second owner got great value, and was the type that took it to the dealer for windshield wiper blades. I'm going to take somewhat of a hit bringing it back to a "new" status. Still will be cheaper than a mediocre current production new sports car. So how many years can we expect to get out of anything without having failures? I work on commercial aircraft that are highly reliable with regular maintenance, but they still eventually require a C or D check or MAJOR service that often is equal to or surpasses 20% of the original purchase price.
Porsche has had issues of one sort or another on every model I imagine as have most cars. I haven't had the car while it was on warranty but if it were on warranty I would be relieved to have it if I had an issue. I would be pissed though if it were in it's first several years of ownership and was in the shop all the time. My maintenance records don't show such problems. In fact I have zero records of warranty service for the vehicle.

fast1

Pushing a car to its limits to me simply means pushing an engine to or near red line. Just a guess on my part, but I suspect that a few Porsche owners have on occasion pushed their cars to red line on the street.