And so it begins.......PAG's response to the current economy...
12-23-2008, 03:26 PM
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12-23-2008, 03:29 PM
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This is the first of many drastic production reductions among all automakers. I think we'll see a few years of 11 million new car sales, and no one's going to be able to park cars for months on overflow lots with cheap financing. It always amazed me how much dead inventory just sat out there in the sun, it's about time they changed this practice.
12-23-2008, 04:34 PM
#18
Three Wheelin'
Cutting back production may only keep a disaster from becoming a catastrophe. Production cut backs must also be done in light of the impact on job losses. It will be interesting to see if Porsche jobs are preserved at the cost of the Audi/VW workforce. Residuals and resale value on used Porsches will not improve any time soon since there are still a lot of cars on the lots and in the pipeline. It may be possible to redistribute cars to dealers in areas were sales are better, but Porsche isn't going to send unsold cars to the chop shop. Creditworthy and cash buyers will continue to receive discounts at Porsche dealers at least in the near term.
12-23-2008, 04:57 PM
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Hmm, I'm not sure where the cut back of new cars coming into the market in times of recession equals lower to no discounts. I would hazard to guess that the discounts will be there if they can lure a buyer. There is a reason that auto sales are in the gutter. I don't think just because fewer cars come to market will push buyers onto the lot.
12-23-2008, 04:58 PM
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Here's hoping that Annapolis Porsche can stay afloat. They just opened in August :O. No offense to the Len Stoler folks, Annapolis is just a hell of alot closer to me!
12-23-2008, 05:26 PM
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Hmm, I'm not sure where the cut back of new cars coming into the market in times of recession equals lower to no discounts. I would hazard to guess that the discounts will be there if they can lure a buyer. There is a reason that auto sales are in the gutter. I don't think just because fewer cars come to market will push buyers onto the lot.
With regards to Porsche keep in mind that even when the economy was so-so in the last couple years; People were snatching up Porsche's at record rates. Although times have certainly changed- for the typical Porsche buyer not as much as one would think.
The reality is there are lot of folks who still want one or a new one or another one. As dealers start going under the stronger will indeed survive. The issue is that dealerships- and it's already begun- will start being VERY protective of their inventories.
Supply and demand will, eventually get more in check.
We're having a fantastic month, and I suspect so are the other 'large' dealers. Not all of them will. But there are dealers who aren't doing as badly as the next.
With no new cars coming in, and nobody willing to trade with them; the little dealers will be feeling more then a pinch in the next month or so.
12-23-2008, 05:41 PM
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I live in Annapolis, and I definitely get the proximity issue. I hope they do well, also. I want all P-car dealers to return to prosperity (or get there for the first time in AP's case). I'd just like mine to prosper first. 
12-23-2008, 08:36 PM
#24
Drifting
The option they've chosen will hurt factory workers and parts suppliers, and the smaller/weaker dealers will be put out of business if it lasts more then a few months. The other option, as GM did after 9-11, offer 0-2% financing and see how many buyers that shakes loose from the sidelines. I don't see a V shaped economic recovery coming, so in the long run, production cuts can't solve this problem, you have to incentivize new buyers.
Last edited by nyca; 12-23-2008 at 08:52 PM.
12-23-2008, 09:02 PM
#26
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12-23-2008, 09:08 PM
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12-23-2008, 09:27 PM
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Fresh back from a little trip back to New England-
My GM informed me that PAG is reducing PRODCUTION another 25%- that means they'll barely produce 55% of 2008's total production numbers.
In addition; Market Reps are telling dealers that they're taking cars away. Over 50 cars are going bu-bye in our market alone.
That means that it's begining. The small - fry dealers will be left to starve and will go under. Stronger dealers will swallow up the competition. Inventories will be much more controlled. Dealer -swaps- for a lot of cars will be a day dream.
Discounting as you've all enjoyed and seen will be winding down.
Smoke'm if you got'em.
My GM informed me that PAG is reducing PRODCUTION another 25%- that means they'll barely produce 55% of 2008's total production numbers.
In addition; Market Reps are telling dealers that they're taking cars away. Over 50 cars are going bu-bye in our market alone.
That means that it's begining. The small - fry dealers will be left to starve and will go under. Stronger dealers will swallow up the competition. Inventories will be much more controlled. Dealer -swaps- for a lot of cars will be a day dream.
Discounting as you've all enjoyed and seen will be winding down.
Smoke'm if you got'em.
12-23-2008, 09:33 PM
#29
Dan:
As an owner since 1972 I could not agree more with your statement. For those who remember the late 80's to early 90's Porsche was in trouble, they created the boxter and their fortunes changed, though many hard core 911 guys thought they sold out, it was a great business move. They are a smart company doing what is right for the current situation. I wish them well.
As an owner since 1972 I could not agree more with your statement. For those who remember the late 80's to early 90's Porsche was in trouble, they created the boxter and their fortunes changed, though many hard core 911 guys thought they sold out, it was a great business move. They are a smart company doing what is right for the current situation. I wish them well.
As a Porsche follower and owner since 1974 I can cite the times where there has been a downturn in Porsche buying over the decades. This is about the third time in all those years. And yet, Porsche always seems to bounce back. They are a credit to their industry in being able to manage effectively. With their present CEO I'm sure they will do fine. I remember 1975 when it was the first time I ever saw the price of a subsequent model year DROP instead of the usual growth. While this will put their goal of 100,000 cars a year on hold for awhile, they are certainly postured to assume production when things turn around. I think we can all agree that it's been smart for Porsche to diversify their line from merely sports cars to include the Cayenne so that when it's less popular to buy a Porsche sports car they can make up volume with the SUV. Such will be the case with the Panamera in time. What we'll see is simply a lot less MY09 cars out and around the marketplace (as used) down the road, much like we see few 928s from their lean years,--they just didn't manufacture that many. I can only say that I'm glad that I had the opportunity to buy new a MY06 car which I consider one of their best designs in decades.
12-23-2008, 10:48 PM
#30
Three Wheelin'
In addition; Market Reps are telling dealers that they're taking cars away. Over 50 cars are going bu-bye in our market alone.
That means that it's begining. The small - fry dealers will be left to starve and will go under. Stronger dealers will swallow up the competition. Inventories will be much more controlled. Dealer -swaps- for a lot of cars will be a day dream.
That means that it's begining. The small - fry dealers will be left to starve and will go under. Stronger dealers will swallow up the competition. Inventories will be much more controlled. Dealer -swaps- for a lot of cars will be a day dream.
You need to clarify what you are speaking to re Porsche's "taking cars away".
If you are talking 08s, it seems to me Porsche had to know that Dealers were going to eat the 08 cars to some extent just based upon the MKII F-L. OK, the economy increased the inventory backlog. However, I can't imagine the same company that bent over Hedge Fund Managers w/o a kiss could not have anticipated the possibility of a glut of cars. OK, then, a reduction of inventory for non FL cars; that would not be a surprise. It would also seem to be a gesture of help and assistance to the Dealers (at the expense of those buyers looking to steal an 08).
From your posts on this and the other 'pricing' thread, however, you seem to be stating that this 'taking away' pertains to allocations for 09 and presumably future model years. Why else use the phrase.. "will be left to starve.."?
If so, then, please explain why Porsche would pull allocations to 'smaller' dealerships. If the Dealer can floor plan the inventory, why not provide the agreed allocation? Is not Porsche's goal to sell as many units as it can (w/in the controlled inventory objective)? While controlled inventories are beneficial, geographic coverage of a product is also beneficial and necessary (particularly in times of excess; remember the economy is cyclical).
Do you believe that Porsche's goal is to revamp its US distribution? To starve and kill off smaller dealerships decreasing geographic coverage? Do you believe that Porsche would refuse their customers orders? To what end? Yes, less units made means less to go around. However, these smaller dealers already received less allocation pre-economic apocalypse and have always had less cars on the lot. They have experienced that environment and survived. It may very well be that the larger dealerships used to stocking inventory are in for a paradigm shift...
Your post seems to imply a 'master plan'. You would need to be in the Board Room at Weissach to really know any of that. While you may be able to see the implementation, you may not see clearly the plan.