Mike in Chi

While some of the positions presented, both pro and con, in the other threads are very convincingly argued, they overlook one dimension of Porsche's business quandry. And it's a dimension PAG and PCNA have referenced in the past.

Porsche, making a high-ticket, highly discretionary item, is highly susceptible to economic downturns (Remember the early 90s?).

The belief is that SUV sales can better weather a storm, and will help keep overall sales from plunging as much.

Listen to dealers (PAG does) and what scares them about the current line (996 & Boxster) is exactly that.

Personally, I think that thinking is sound.

Then the question is will it be high performance enough to fit the Porsche Brand Equity?

That's a question we won't know the answer to for a few months yet.

ked

Mike, are you suggesting that Porsche is being responsive to their direct customers (who actually write checks to PCNA at wholesale) in parallel to marketing aimed at (retail) end-users? Now there's a novel concept.

If you REALLY want to influence the future course of Porsche, buy a franchise.

Mike in Chi

Hi Kevin

Actually, I'm suggesting they are being responsive to every person who made an investment in the company.

Mike in Chi

roschpe

Economic downturn has no effect on whether I purchase a $80,000 SUV or $80,000 sports car.

Either I have the money or I don't.
If I don't have it, I don't buy either car, nor SUV.

Thanks for your opinion, but you don't make sense, at all.

The only element we need to talk about is how Porsche got to where it is today, ie Racing., and where it thinks it is going to go without, Racing.

Todd

Kinda like Business 101

You develop your "plan "to get operating cost covered so the company will stay afloat (Cayanee, boxster). Then you can take risks on BIG money makers, and other good endevors(911 and racing).
If the fun stuff crashes on top of you, you are still in business. If it does well, even better.
Porsche has no "Fiat" behind them for financial stability. I'm neautral on the SUV thing. I think it is a good business decision, and even in 2003 will sell well. If it is hideous it will upset me, but if it is good and they enter parker-Davis then great!

Paul M

If Porsche were so worried about economic downturn, surely they would have gone the other way and produced another 924.

I believe the biggest selling item for Porsche currently is also their least expensive - the Boxtser...

There are some similarities between the 924 and Cayenne - developed in conjunction with VW to keep costs down, etc.

I don't think a $65k product will have the same sales volume that a $20-25k product would.

--Paul--
'97 Carrera

Todd

Except that, like the 924, the Cayanne is goingto be like (don't know the exact number) 15-20% Porsche, and the rest suppliers. So, although high initial price., also high profits

Paul M

[quote] Except that, like the 924, the Cayanne is goingto be like (don't know the exact number) 15-20% Porsche, and the rest suppliers. So, although high initial price., also high profits <hr></blockquote>

Good point Todd. However, Porsche have been making record profits anyway for the last several years.

How'd they do that?

Easy. Since 1998 they've been charging hand built prices for production line items.

--Paul--
'97 Carrera

Mike in Chi

Paul,

I don't thinnk another sports car, even an even cheaper one will do the trick for them. Sports cars are more discretionary than SUVs, and which is probably why they went the truck route.

The rumors of a really low cost entry model pop up every couple of years, but I think they want to stay in the high margin arena, and as Todd points out so well, sharing the development costs helps them maximize the profit.

Mike in Chi