Aug 21, 2003 4:38:25 PM
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Ron (Houston)
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- Loc: Houston, TX , United States
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Unsold Cayenne....Bloomberg.com
Unsold Cayenne SUVs Could Hurt Porsche's Stock
Aug. 21 (Bloomberg) -- Initial U.S. sales of Porsche AG's high-performance Cayenne SUV reveal buyers are choosing the most expensive options. The problem is not enough Cayennes are being sold, and those without the options are piling up.
The inventory of unsold Cayennes may explain why the price of Porsches' preferred shares have declined almost 17 percent this year. The Stuttgart-based company's common stock is held privately.
Porsche, as a matter of policy, refuses to discount its vehicles, thereby removing one possible means of reducing its Cayenne inventory. The company says it can't risk devaluing its cachet.
The Cayenne represents a departure and a risk for an automotive brand that made its fortune building high-priced, low- slung sports cars. Porsche believes its long-term profitability will hinge on making inroads in unfamiliar market territory, one that is becoming so dominated by truck-based variants.
Prior to March, when Cayenne went on sale in the U.S., automotive analysts openly wondered how many buyers would spend up to $90,000 for a vehicle more closely associated with soccer moms than race-driver wannabes.
60-Day Supply
As of July 31, U.S. sales of Cayenne were 1,354 for the month and 6,350 so far in 2003, boosting the automaker to a 15 percent sales gain for the year. Without Cayenne, Porsche's U.S. sales would have dropped 21 percent.
Porsche said Cayenne sales are consistent with its projections. Still, the inventory of unsold Cayennes represents a 60-day supply ``which is unusual for us,'' said Martin Peters, a spokesman. ``We have to accept higher levels of stock, people want to order cars exactly to their liking.''
In most instances customers must wait for delivery of Porsche models or choose from a limited inventory, which undoubtedly has contributed to the brand's mystique.
``We're off to a relatively slow start with the Cayenne, but modifying the content will help us gain momentum for this wonderful car,'' said Bob Snodgrass, owner of Brumos Porsche in Jacksonville, Florida.
Peter Hennessy, co-owner of Hennessy Porsche in North Atlanta called the Cayenne ``a spectacular vehicle.'' The less expensive versions, he said, are running into competition from BMW's X5 sport utility ``that are $10,000 less than Cayenne when you consider all the discounts BMW is giving.''
Air Suspension Popular
The entry level, $56,000 version of the Cayenne -- with numerous luxury items such as leather upholstery -- doesn't come with air suspension. The air suspension has proven popular; it is installed as standard equipment in the $89,000 model, powered by a turbocharged engine.
Continental AG, manufacturer of the $3,200 suspension option, hasn't been able to keep up with demand. The suspension controls the vehicle's height and makes the ride smoother.
U.S. buyers also seem to favor the 19-inch and 20-inch wheels, selling as $2,100 options, rather than the standard 18- inch wheels. ``The bigger ones are scarce,'' said Snodgrass.
Next month Porsche is expected to introduce a six-cylinder version of Cayenne, inviting inevitable comparisons with Volkswagen AG's new VW Touareg sport utility, which ranges in price from $35,000 to $50,000. Cayenne and Touareg bodies are identical and are manufactured at the same assembly plant in Bratislava, Slovakia.
VW, after its first two months in the U.S. market ending July 31, reported 1,669 Touareg sales.
Thinking Emblem
Lehman Brothers, which is recommending Porsche's preferred shares, said on Aug. 8 that the ``stock price outlook depends principally on its earnings in the current 2004 fiscal year,'' which ends on July 31, 2004. The automaker is scheduled to post earnings for fiscal 2003 on Sept. 9.
There is a consensus among equity analysts that Porsche will post earnings for the 2003 fiscal year of about 31.6 Euros ($35.20) per share, which would represent its ninth consecutive year of increasing profit -- something not even Toyota Motor achieved over the same period.
Proving that Cayenne can be a consistent moneymaker won't be easy for Porsche. The lower-priced eight-cylinder version and the expected six-cylinder model will run smack into formidable competition from numerous competitors.
The trick will be to hold on to the high-priced end of the luxury SUV segment and to convince others that the Porsche emblem justifies the price in the more competitive end of the segment. After all, the number of buyers who will shell out $60,000 and up for a new vehicle doesn't constitute much of a market.
Aug. 21 (Bloomberg) -- Initial U.S. sales of Porsche AG's high-performance Cayenne SUV reveal buyers are choosing the most expensive options. The problem is not enough Cayennes are being sold, and those without the options are piling up.
The inventory of unsold Cayennes may explain why the price of Porsches' preferred shares have declined almost 17 percent this year. The Stuttgart-based company's common stock is held privately.
Porsche, as a matter of policy, refuses to discount its vehicles, thereby removing one possible means of reducing its Cayenne inventory. The company says it can't risk devaluing its cachet.
The Cayenne represents a departure and a risk for an automotive brand that made its fortune building high-priced, low- slung sports cars. Porsche believes its long-term profitability will hinge on making inroads in unfamiliar market territory, one that is becoming so dominated by truck-based variants.
Prior to March, when Cayenne went on sale in the U.S., automotive analysts openly wondered how many buyers would spend up to $90,000 for a vehicle more closely associated with soccer moms than race-driver wannabes.
60-Day Supply
As of July 31, U.S. sales of Cayenne were 1,354 for the month and 6,350 so far in 2003, boosting the automaker to a 15 percent sales gain for the year. Without Cayenne, Porsche's U.S. sales would have dropped 21 percent.
Porsche said Cayenne sales are consistent with its projections. Still, the inventory of unsold Cayennes represents a 60-day supply ``which is unusual for us,'' said Martin Peters, a spokesman. ``We have to accept higher levels of stock, people want to order cars exactly to their liking.''
In most instances customers must wait for delivery of Porsche models or choose from a limited inventory, which undoubtedly has contributed to the brand's mystique.
``We're off to a relatively slow start with the Cayenne, but modifying the content will help us gain momentum for this wonderful car,'' said Bob Snodgrass, owner of Brumos Porsche in Jacksonville, Florida.
Peter Hennessy, co-owner of Hennessy Porsche in North Atlanta called the Cayenne ``a spectacular vehicle.'' The less expensive versions, he said, are running into competition from BMW's X5 sport utility ``that are $10,000 less than Cayenne when you consider all the discounts BMW is giving.''
Air Suspension Popular
The entry level, $56,000 version of the Cayenne -- with numerous luxury items such as leather upholstery -- doesn't come with air suspension. The air suspension has proven popular; it is installed as standard equipment in the $89,000 model, powered by a turbocharged engine.
Continental AG, manufacturer of the $3,200 suspension option, hasn't been able to keep up with demand. The suspension controls the vehicle's height and makes the ride smoother.
U.S. buyers also seem to favor the 19-inch and 20-inch wheels, selling as $2,100 options, rather than the standard 18- inch wheels. ``The bigger ones are scarce,'' said Snodgrass.
Next month Porsche is expected to introduce a six-cylinder version of Cayenne, inviting inevitable comparisons with Volkswagen AG's new VW Touareg sport utility, which ranges in price from $35,000 to $50,000. Cayenne and Touareg bodies are identical and are manufactured at the same assembly plant in Bratislava, Slovakia.
VW, after its first two months in the U.S. market ending July 31, reported 1,669 Touareg sales.
Thinking Emblem
Lehman Brothers, which is recommending Porsche's preferred shares, said on Aug. 8 that the ``stock price outlook depends principally on its earnings in the current 2004 fiscal year,'' which ends on July 31, 2004. The automaker is scheduled to post earnings for fiscal 2003 on Sept. 9.
There is a consensus among equity analysts that Porsche will post earnings for the 2003 fiscal year of about 31.6 Euros ($35.20) per share, which would represent its ninth consecutive year of increasing profit -- something not even Toyota Motor achieved over the same period.
Proving that Cayenne can be a consistent moneymaker won't be easy for Porsche. The lower-priced eight-cylinder version and the expected six-cylinder model will run smack into formidable competition from numerous competitors.
The trick will be to hold on to the high-priced end of the luxury SUV segment and to convince others that the Porsche emblem justifies the price in the more competitive end of the segment. After all, the number of buyers who will shell out $60,000 and up for a new vehicle doesn't constitute much of a market.
), especially the Turbo is actually the Cayenne who represents the name Porsche. 
) has been going around torching SUVs ( another 50 at one dealership just the other day ) and spray painting SUVs all over the body and windows with slogans like " no guns for oil ( Iraq) " and E.L.F. They also target expensive SUVs in wealthy suburban parking lots and in front of homes in Southern Cal especially and have struck Hummer H2s , Escalades, Suburbans , new Range Rovers , MLs and X5s. They know about the $90K 450 hp Cayenne Turbo now , which pi**es them off the most as the ultimate $$$ and power SUV - so be forwarned down there ! ( they also recently struck in Santa Cruz, so they are attacking in Northern California now , too. )
