Cupcar

I am traveling and don't have the article so can't say where Forbes got the data, I doubt they made it up. they said gross margin as I recall

My prediction would be gross at the time of the articles writing. based on the concept that because of the shared content between the cars the 911 was cheaper to produce than a Boxster S at that time i.e. front suspension, front sheetmetal, dash, doors identical, engines are very similar, brakes identical, front suspension, gear cluster identical but configured for mid vs rear engine, etc and the complex top of the Boxster has to add a lot of cost. So I speculate the Boxster S of the time was cheaper to build than a 911 of the time.

I meant the GT2 of the time of the article as well. I view the last GT2 to be a decontented Turbo,no 4WD, many expensive features and trim removed with PCCB added and a few engine tweaks that are cheap to produce sold at an increase in price of around 50K dollars over the Turbo, so I figure the gross profit must have been around 100% on the last GT2 produced.

I agree this is just my wild speculation based on dissecting the content of the cars and relating its price to the Forbes claims.

Nordschleife

Interesting that so many people see it that way. When you really start working on developing the car, you discover that PAG have saved you a lot of work when you compare the GT2 to the TT.

Also interesting, given the costs and relatively low number of cars over which to recover development costs, the dealer's margin was cut back on this car, in Europe.

R+C

Nick

You are following the company line which is not surprising. My rebuttal is very simple. Many of not most great companies are listed on US stock exchanges. They have no problem with the disclosure requirements. Only those that have something to hide would run from the requirement of honest and straightforward sharing of information with shareholders and the public.

pole position

Dear Nick,

It must hurt , but there is a world besides the US and Wallstreet. "honest and straightforward sharing" is easily pushed aside for good american capitalism aka greed,nothing wrong with that but your statement is hypocracy at it's best.............your coveted prancing horse status symbol would not be able to stand on there own feet without Marlboro, who share honestly and straighforwardly cancer with the rest of the world and maybe Ferrari can learn something from PAG as far as there dead fish Maserati is concerned.

Nordschleife

Nick
You couldn't be further from the truth.

I am several kinds of CPA/CMA/ACA and in my youth passed the NASD's Principals' exam (long dark evenings). I have worked in Broking and Investment Banking around the world, quite often for US firms.

I have what is known as an informed opinion on this matter

Contrary to your assertation, US companies have major problems with quartlerly reporting and the cult of continuous growth, just look at how compliance costs have skied in recent years. All paid for by shareholders. And mostly illusory in terms of efficacy as the latest round of option issue dater juggling is exposing.

It takes a long time to bring new cars to market, the need to show continuous year on year growth, quarter by quarter can easily deflect a company from its long term goals. If you want to see what effect this cult has upon Auto makers, just look at Detroit, where they really do hold the customer in the utmost contempt!

Just look at PAG's share price performance oin the last few years, they are delivering great returns to their shareholders.

You argument is completely without merit, even the most cursory examination of the facts would reveal its total lack of merit.

Most US security law is based around the principle of trying to save foolish people from themselves. Despite years of observing, on a daily basis the fatuity of such a notion, the NEC and the legislators have filed to comprehend that point, you appear to be numbered amongst them.

R+C

Holger B

100% gross margin...only if it was made from air by nonunion leprechauns.

Nick

Jeff if I was a public company I would disclose.

R+C, is it your position that Porsche cannot be profitable and competitive if it had to meet disclosure requirement of US laws? Are you confusing the Sarbanes-Oxley requirements with exchange requirements?

Look I am well of the criticism that quarterly reporting tend to force companies to act short term and not long term. However, the evidence/facts are overwhelming that by having the requirement, companies have profited and so has the buying public. The US stock exchanges are at record levels and so are profits. With the majority of the public invested in the exchanges (401K, pension plans, mutual funds and so on) they are much better of. The relative security of where the company stands financially and looking forward is a boom to stock price and product confidence. Thus CEO's complaining about reporting is nothing more than being disingenuous.

The reason why Detroit is in deep trouble has nothing to do with reporting . They missed judged their customer and competitors.

Cupcar

If you believe the Forbes magazine numbers that claim Porsche made 45% on a Turbo selling for $111,000.

To make GT2 take Turbo above and subtract 4 wheel drive, sunroof, rear leather seats, stereo system, retractable spoiler and other amenities.

Add PCCB, fixed fiberglas rear spoiler, swap out the suspension bits and add new ones mostly from GT3 with different spring and shock rates, add steel syncros to the gearbox, add new front valence and radiator ducting, change turbo and DME management. Sell for $160,000+

I can see 100% profit there even considering some development costs.

Nordschleife

Nick
The point made by PAG management is that their business does not work on a quarterly cycle. That quarterly reporting would result in more unstability in the share price as analysts react to short term variations in profit at the expense of the long term trend.
R+C

Nordschleife

Holger

I am led to believe that if you strip the TT and GT2 engines down and examine the parts, you will find a number of significant differences between the components.
To quote you.....'different spring and shock rates'...... the cost of doing this is high, not so much in materials as in development time. So too with everything else with the need for hot and cold climate testing, enduranvce testing, regulatory approval and certification......
The margins on the car were lower than is the norm, hence the dealer margin was reduced, in the European market certainly I don't know about others.
To all those who bitch about Porsche overcharging, consider this, quattro GmbH charge me more than PAG does to build me exclusive interiors.

R+C

Nick

Can we all agree Porsche makes about four times the profit per car than any other car manufacturer in the world? Reasons for this unusually high profit margin compare to industry average are only known to Porsche.

Holger B

I'm not disputing your assertion about the higher profitability of the GT2, although I agree with others that you're ignoring a lot of ancillary costs that may not make this true.

It's your semantics that don't work. Gross profit equals selling price (from PAG to the dealers in this case) less cost of goods sold. To get 100% gross profit, COGS would have to be zero (materials, labor, etc). You seem to be referring to incremental margin. (I'm a finance guy, so I can't let it slide... )

pole position

Maybe Forbes should get their facts straight..............the Boxster S did not have a base of 51600 in the US.

Nordschleife

Before anybody wets their pants so that anybody else can smell them. Remember that that the hire companies traditionally buy their cars at a 40% discount. The only way this is sustsainable is if this is above the variable cost per unit.

R+C

icon

"hire companies"
can you translate this into hairy southern primate english? consultant? . . . vendor? . . . racer?
is the 40% pertaining to pag only? 40% off which price?
if so how does this compare to other oem's "hire companies" discounts?
dealers don't get that high of a discount for personal purchases in the u.s.
edit: after googling it looks like you are referring to what we hairy southern primates refer to as "car rental companies"!?