Jan 24, 2007 5:37:15 AM
- silverrules
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- Loc: N. Calif , United States
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Board: Porsche - 911 - 997 - Turbo
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Jan 24, 2007 6:51:06 AM
- hatchback
- Junior
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- Loc: USA
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- Reply to: silverrules
What a bunch of nonsense!
As a consumer, why do you care how much profit porsche makes? All that affects you is how much their products cost and how much value they deliver to you. A high profit margin is a sign of a well-run business, namely, that they are able to deliver a lot of value to their customers while controlling their own expenses, something which so few other automobile manufacturers are able to do. A high profit margin does not indicate that Porsche is screwing their customers any more than a low or negative profit margin indicates that a business loves their customers. Everyone knows that GM and Ford are loosing money on most of the cars they sell because (with few exceptions) they haven't been able to make cars that people want and they haven't been able to control their own expenses. If you think Porsche is screwing their customers with a high profit margin, then you must think Ford and GM are the best businesses in the world and be ever so eager to purchase the cars on which they are loosing the most money.
Jan 24, 2007 10:15:18 AM
- Porsche-Jeck
- Rennteam Master
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- Loc: Rheinland , Germany
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- Reply to: hatchback
Re: What a bunch of nonsense!
hatchback - excellent post, I couldn't agree more 
If a low profit margin would be an indication for the best value for money we all should buy FIAT cars in the future
Also the comparison with carmakers like BMW or DC is misleading IMO (the Mini or the 1-series are diluting the overall figure, whereas margins for M5 or M6 are also high without doubt).
Having said that a lot of customers nonetheless have the feeling that PAG should re-adjust the balance between shareholder value and customer value as PAG seems to fall behind in terms of innovation (example: PDK) and expected "content" in their cars. But those who think, PAG could put additional content worth 20k$ into their cars, are dreaming (though I have to admit it's a nice dream
)
Just an example: if PAG would either reduce prices (average price on the current line-up with average options) by appr. 6k Euro -7k Euro or put additional content worth 6k Euro -7k Euro into their cars, they'd end up with the same return on sales margin (operating profit for the car business) like Toyota (10%)
- of course the 6k Euro /7k Euro is only an average figure (maybe they could put an additional worth of just 2k Euro into a base Boxster, whereas for a 997 TT there would be room for 10k Euro or so).
Of course this will hapen only, if PAG would be forced to do so (read: loosing customers without delivering more value for money). BTW I'm sure that Nick's doomsday scenario never will materialize, just because PAG has the financial strength to react if they'd realise that customers would turn away (they just didn't feel the urge up to date).
IMO the interesting question is not so much whether PAG's high profit margins are a sign of raping customers (nobody is forced to buy a Porsche), but what they are going to do with their huge profits and where they're aiming at with their corporate strategy (Panamera, VW investment etc.)
If a low profit margin would be an indication for the best value for money we all should buy FIAT cars in the future
Also the comparison with carmakers like BMW or DC is misleading IMO (the Mini or the 1-series are diluting the overall figure, whereas margins for M5 or M6 are also high without doubt).
Having said that a lot of customers nonetheless have the feeling that PAG should re-adjust the balance between shareholder value and customer value as PAG seems to fall behind in terms of innovation (example: PDK) and expected "content" in their cars. But those who think, PAG could put additional content worth 20k$ into their cars, are dreaming (though I have to admit it's a nice dream
)Just an example: if PAG would either reduce prices (average price on the current line-up with average options) by appr. 6k Euro -7k Euro or put additional content worth 6k Euro -7k Euro into their cars, they'd end up with the same return on sales margin (operating profit for the car business) like Toyota (10%)
- of course the 6k Euro /7k Euro is only an average figure (maybe they could put an additional worth of just 2k Euro into a base Boxster, whereas for a 997 TT there would be room for 10k Euro or so).
Of course this will hapen only, if PAG would be forced to do so (read: loosing customers without delivering more value for money). BTW I'm sure that Nick's doomsday scenario never will materialize, just because PAG has the financial strength to react if they'd realise that customers would turn away (they just didn't feel the urge up to date).
IMO the interesting question is not so much whether PAG's high profit margins are a sign of raping customers (nobody is forced to buy a Porsche), but what they are going to do with their huge profits and where they're aiming at with their corporate strategy (Panamera, VW investment etc.)
Your post is "what a bunch of nonsense"
As a consumer, of course I care how much profit is being generated by a company - Porsche is a money machine for the benefit of its stockholders, not its consumers. Yes, I get value but in my opinion, not enough for the dollars I spend with Porsche. That's why I have placed a deposit on a R8 V10, for example.
BTW, can you answer this question:
"As a consumer, why do you care how much profit ExxonMobil makes?"
BTW, can you answer this question:
"As a consumer, why do you care how much profit ExxonMobil makes?"
Re: Your post is "what a bunch of nonsense"
I'd agree with hatchback.
An example from another industry can be found in the gaming console market.
Nintendo makes sure they make a profit on each of the Handheld DS and the new Wii console. They are making a huge margin now compared to their rivals (PS and XBox).
Yet no one accuses Nintendo of ripping their customers off because afterall, you buy things because you want to - these are not "necessities" so you pay what you're willing to pay in exchange of a certain level of utility.
Both Nintendo and Porsche managed to create a product that is relatively un-rivalled and sure as hell, they have the right to milk it! Wouldn't you if you were in their position?
I suppose the only difference in the case of the Wii console is that it is unique AND cheaper than its rivals. Now beat that!
An example from another industry can be found in the gaming console market.
Nintendo makes sure they make a profit on each of the Handheld DS and the new Wii console. They are making a huge margin now compared to their rivals (PS and XBox).
Yet no one accuses Nintendo of ripping their customers off because afterall, you buy things because you want to - these are not "necessities" so you pay what you're willing to pay in exchange of a certain level of utility.
Both Nintendo and Porsche managed to create a product that is relatively un-rivalled and sure as hell, they have the right to milk it! Wouldn't you if you were in their position?
I suppose the only difference in the case of the Wii console is that it is unique AND cheaper than its rivals. Now beat that!
Jan 24, 2007 12:01:48 PM
- Alan(NJ)
- Pilot
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- Loc: Paramus NJ USA
- Posts: 403, Gallery
- Registered on: Mar 29, 2002
- Reply to: silverrules
manufacturing cost of product v. profit margin
a 28% profit on a manufactured item after sales and marketing expenses (and all other expenses) have been deducted is quite handsome. A 50% cost of product is commonplace, but after all other charges are deducted, the profit margin often shrinks to 15%.
of course I'd milk it
and have done so in my own line of work quite effectively - but I owned the company. His point that we as consumers shouldn't care about how much profit is generated, I consider to be exactly why Porsche can charge 3K for GT silver but nothing for arctic silver - I do care, sorry.
Re: Your post is "what a bunch of nonsense"
Quote:
Alan(NJ) said:
As a consumer, of course I care how much profit is being generated by a company - Porsche is a money machine for the benefit of its stockholders, not its consumers. Yes, I get value but in my opinion, not enough for the dollars I spend with Porsche. That's why I have placed a deposit on a R8 V10, for example.
BTW, can you answer this question:
"As a consumer, why do you care how much profit ExxonMobil makes?"
Did you read the press release? " Euro 203 million Euros of the pre-tax result comes from the participation in Volkswagen AG" which owns Audi. Your pending purchase of an R8 will increase Porsche's profit per car ratio.
Re: Porsche is a TRUE LUXURY ITEM
Quote:
MMD said:
Yachting is a luxury and it is very expensive. EVERYthing is over-priced. BUT the people who CAN afford it don't notice it. Same would be true of intercontinental private aircraft.
Jerry Seinfeld or some Hollywood moviestar could care less that us$20K is an overcharge by Porsche.
It's just that "the rest of us" are used to getting good value in a car. A car is supposed to be practical necessity for most people in the western world.
Problem is Porsche is a LUXURY item and you are going to have to pay ALOT more to get it.
Is it worth it?
No- if you really can't afford luxury.
Yes- if you can.
Again, the fact that Porsche is a CAR is what's confusing; you'd think a car would be a "good value," and "fairly priced." Maybe think again... .
Most cars are luxury, almost at every price point these days.
In europe, Renault introduced a simple car, the Logan that is going against the trend: a simple cheap car, roomy but without any luxury like power this and that and a small engine. No fancy design. Guess what: huge success. A lot of people just see car as transportation and prefer put money somewhere else. It is even considered as "cool" as in "I don't care about cars".
Bottom line: no one needs to spend more than $20k on a car, everything else is luxury. Porsche is just more luxury than other brands, kudos to them for building cars, selling tons of them and making tons of money, even if we get dissapointed almost everytime in new model introductions.
Re: I drove an Audi S8 the other day
Porsche is all about engineering. They have the best overall engineered cars available at any price IMO. I'm an engineer and can appreciate what they have done and how difficult the engineering tasks have been. Engineering is more visible to the lay person (technicalwise) in racing, and we all know what Porsche has and continues to do with factory developed road racing...latest example the P2 Spyder. Include the Spyder with a long list of very successful racing cars, from the 904, 907, 917, 935, 956, 962 and many many more. No one comes close to Porsche in road racing past and present, this is simply because Porsche has the best engineered cars. Audi has been successful lately (R8 & R10) but with rumered Porsche help.
It's facinating to do a study on Porsche and their history, many books are available. You will uncover some very interesting things, from the monster "widomaker"1972 917/30 (>1500hp) to the genius of the Evo and Spyder to the effective detuning of the Indy engine just prior to race.
If you are Porsche fan or just want to TRUELY understand what Porsche is all about you owe it to yourselve to take a look at the history of Porsche engineering.
Superior engineering is the Premium on Porsche, and well worth it IMO.
Mike
It's facinating to do a study on Porsche and their history, many books are available. You will uncover some very interesting things, from the monster "widomaker"1972 917/30 (>1500hp) to the genius of the Evo and Spyder to the effective detuning of the Indy engine just prior to race.
If you are Porsche fan or just want to TRUELY understand what Porsche is all about you owe it to yourselve to take a look at the history of Porsche engineering.
Superior engineering is the Premium on Porsche, and well worth it IMO.
Mike
Re: What a bunch of nonsense!
Quote:
hatchback said:
As a consumer, why do you care how much profit porsche makes? All that affects you is how much their products cost and how much value they deliver to you. A high profit margin is a sign of a well-run business, namely, that they are able to deliver a lot of value to their customers while controlling their own expenses, something which so few other automobile manufacturers are able to do. A high profit margin does not indicate that Porsche is screwing their customers any more than a low or negative profit margin indicates that a business loves their customers. Everyone knows that GM and Ford are loosing money on most of the cars they sell because (with few exceptions) they haven't been able to make cars that people want and they haven't been able to control their own expenses. If you think Porsche is screwing their customers with a high profit margin, then you must think Ford and GM are the best businesses in the world and be ever so eager to purchase the cars on which they are loosing the most money.
You are way off the mark. By inflating profit, the article is less valuable. That is why you are beginning to see Porsche resale market take a substantial hit. Porsche's do not hold their value as they had done in the past.
However, I am not surprised that many will defend their purchase regardless of what it is costing them. In that regard most car manufacturers are envious of Porsche. They could tell their customer base that white is black and their customers will readily accept it.
Re: What a bunch of nonsense!
While I think the profit margin is shocking, the value of the article is born by market forces - supply and demand. Porsche produced far more 996's than 993's. Hence, the 996 values have dropped off far more quickly than the 993's. The 997TT has been out over 6 months now and auction prices are still at MSRP.
Re: What a bunch of nonsense!
Quote:
nberry said:Quote:
hatchback said:
As a consumer, why do you care how much profit porsche makes? All that affects you is how much their products cost and how much value they deliver to you. A high profit margin is a sign of a well-run business, namely, that they are able to deliver a lot of value to their customers while controlling their own expenses, something which so few other automobile manufacturers are able to do. A high profit margin does not indicate that Porsche is screwing their customers any more than a low or negative profit margin indicates that a business loves their customers. Everyone knows that GM and Ford are loosing money on most of the cars they sell because (with few exceptions) they haven't been able to make cars that people want and they haven't been able to control their own expenses. If you think Porsche is screwing their customers with a high profit margin, then you must think Ford and GM are the best businesses in the world and be ever so eager to purchase the cars on which they are loosing the most money.
You are way off the mark. By inflating profit, the article is less valuable. That is why you are beginning to see Porsche resale market take a substantial hit. Porsche's do not hold their value as they had done in the past.
However, I am not surprised that many will defend their purchase regardless of what it is costing them. In that regard most car manufacturers are envious of Porsche. They could tell their customer base that white is black and their customers will readily accept it.
So what you are saying is that used car buyers are smarter than new car buyers... hence the depreciation? Just not supply and demand? Wait, Ferrari knows nothing of supply manipulation.
Re: What a bunch of nonsense!
Quote:
nberry said:You are way off the mark. By inflating profit, the article is less valuable. That is why you are beginning to see Porsche resale market take a substantial hit. Porsche's do not hold their value as they had done in the past.
However, I am not surprised that many will defend their purchase regardless of what it is costing them. In that regard most car manufacturers are envious of Porsche. They could tell their customer base that white is black and their customers will readily accept it.
Devaluation of used cars have absolutely nothing to do with profits made by the manufacturer. Actually P cars hold their value much better than 95% of all other cars out there. Supply and demand drive the price, P is building as many cars as they can, still there is good demand in the used market for P cars.
Re: What a bunch of nonsense!
the days of porsches being sold new in service stations or garages is long gone....every issue of christopherous makes me seriously wonder how much all the non car related s_ _ t costs ...the answer is a lot and its a no brainer that it factors heavily in p-car pricing....personally i couldnt care less about the ad-nauseum tennis starlets activities...sure would like tt sports exhaust, pdk , powerkit, overall lemans wins, etc.
Re: Porsche is a TRUE LUXURY ITEM
Quote:
moto said:Quote:
fritz said:Quote:
Atzporsche said:
I just watched topgear test the 997 carrera S against the M6 and the new baby Austin and the Porsche totally destroyed them in a simple road test stretch!
Baby Austin? Was that an A30 or the "higher powered" A35?
Thought we'd heard the end of the Austin brand-name when MG Rover was sold to the Chinese.
I think he meant Aston Martin!
The 997S vs M6 vs AMV8 episode!
I think I did know that!
(I recorded the test report that Top Gear made on the Isle of Man when it was first broadcast).
I just couldn't miss that opportunity to "misunderstand" when I read the (unintended) reference to the "Baby Austin". That particular Austin was such a forgetable car that I doubt you often hear it mentioned these days.
Re: What a bunch of nonsense!
Quote:
eclou said:
While I think the profit margin is shocking, the value of the article is born by market forces - supply and demand. Porsche produced far more 996's than 993's. Hence, the 996 values have dropped off far more quickly than the 993's. The 997TT has been out over 6 months now and auction prices are still at MSRP.
True but 6 months down the line (when the initial demand for the new turbo is satisfied) the msrp price dealers are now getting for a new turbo will change. I think discounts of 2K - 4K off msrp will not be uncommon. Porsche plans on surpassing 996 TT production with the 997 TT. What makes Porsche so profitable as a car company is that they are the best at optioning out a car. No other car manufacturer does it better. IMO.
Re: What a bunch of nonsense!
Quote:
nberry said:
You are way off the mark. By inflating profit, the article is less valuable. That is why you are beginning to see Porsche resale market take a substantial hit. Porsche's do not hold their value as they had done in the past.
Imagine a world where Porsche management was greedy, incompetent, and corrupt. They tripled their own salaries, agreed to every request from their unions, and negotiated unfavorable deals with their suppliers in exchange for under-the-table payments. In this alternate world, Porsche looses $25k per car. Now ask yourself, are Porsche's products more valuable to the consumer in that alternate world simply because Porsche is loosing money on their manufacturer? Would they depreciate less rapidly? Or is your statement nonsensical?
Re: Your post is "what a bunch of nonsense"
IMHO, this is taking a silly view for an open market enviroment with competitive consumer choices. I guess if Disney's profits are too high, you won't see their movies and go to another, less profitable producer's show. Are Nokia's profits too high for you to buy their cell phones? In which year? You should get away from the regulated profit margin for utilities model as the way to assure value for consumers. It doesn't work. You are free to judge the product's cost to you for the value received as compared with other choices. This is the true power of the consumer, not watching profits and judging if they are the right amount in a given year to guide their cost/value decision. 
Re: What a bunch of nonsense!
Quote:
aah986 said:
"Porsche plans on surpassing 996 TT production with the 997 TT".
How do you know that?
I don't think anyone can "know" that except the insiders at Porsche but from reading different posts on this board (and 6sponline forum) I beleive it to be correct. All you have to do is look at the 996 TT production and compare it to the 993 TT production and you will see the effect it has on resale value. I think the 997 TT course is no different but that is IMO, not fact.
Jan 25, 2007 10:01:50 AM
- Porsche-Jeck
- Rennteam Master
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- Loc: Rheinland , Germany
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- Reply to: nberry
since we believe in "free market" economics
perhaps the days of Porsche's dominance (dare I say "monopoly") in the 100-150K segment will finally be challenged:
http://www.autoextremist.com/page2.shtml#Rant
and maybe we'll see some of those "profits that we as consumers shouldn't care about" be translated into more value in the cars we choose to buy.
http://www.autoextremist.com/page2.shtml#Rant
and maybe we'll see some of those "profits that we as consumers shouldn't care about" be translated into more value in the cars we choose to buy.
Re: since we believe in "free market" economics
Yep, Alan. That's exactly what we'll hope Porsche does and does not putting too much into diversification, or gets fat internally. Both are risks that companies that have a period of "fortunate" profits tend to do and end up losing their edge (look at GM, ATT, etc.). Here's hoping that these great profits fuel the next generation of extraordianry drivers' cars out of Porsche and we don't end up seeing them being more occupied with VW or something else.
Jan 25, 2007 5:38:00 PM
- LoranTw
- Senior
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- Loc: Canada
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- Registered on: Apr 14, 2006
- Reply to: Porsche-Jeck
Re: What a bunch of nonsense!
Quote:
Porsche-Jeck said:Quote:
nberry said:
By inflating profit, the article is less valuable.
LoL
This has to be a first...a real communist that drives a Ferarri.
Re: Are we getting hosed?
I would say these numbers are derived by dividing the total profit by the number of cars sold.
This is just another way of saying that Porsche is a VERY profittable car manufacturer. But, I'm sure they have other ventures that contribute to their profit other than selling cars, plus their stake in Volkswagen. This means the 28000/car number is probably inflated.
That said, they sure do screw us on the options don't they?
This is just another way of saying that Porsche is a VERY profittable car manufacturer. But, I'm sure they have other ventures that contribute to their profit other than selling cars, plus their stake in Volkswagen. This means the 28000/car number is probably inflated.
That said, they sure do screw us on the options don't they?
The automotive bargain of the decade!
Apparently Ford lost $24,000 a minute in 2006 while Porsche was making $24,000 per car. It's time for all the critics of Porsche's profits in this thread to step up to the plate and purchase a Ford. Not only will you be getting an unbelievable bargain, but your Ford vehicle will actually appreciate in value as soon as you take it off the lot 
http://money.cnn.com/2007/01/25/news/companies/ford_2006_loss/index.htm
http://money.cnn.com/2007/01/25/news/companies/ford_2006_loss/index.htm
Re: The automotive bargain of the decade!
Quote:
hatchback said:
Apparently Ford lost $24,000 a minute in 2006 while Porsche was making $24,000 per car. It's time for all the critics of Porsche's profits in this thread to step up to the plate and purchase a Ford. Not only will you be getting an unbelievable bargain, but your Ford vehicle will actually appreciate in value as soon as you take it off the lot
http://money.cnn.com/2007/01/25/news/companies/ford_2006_loss/index.htm
That's awesome, by nick business reasoning, Fords could be the better than California Real-estate investment at the moment.
Re: The automotive bargain of the decade!
It's like real estate: the car is worth whatever people are willing to pay.
Years of experience allow Porsche to "set" the price on their cars to the level of whatever people will pay.
IOW, the price is jacked up to where they can still sell cars.
The fact that they are selling ALOT of cars means MAYBE they are priced too LOW!
Remember the MSRP is a "suggested" price. Pretty good suggestion because buyers are mostly paying it!
Years of experience allow Porsche to "set" the price on their cars to the level of whatever people will pay.
IOW, the price is jacked up to where they can still sell cars.
The fact that they are selling ALOT of cars means MAYBE they are priced too LOW!
Remember the MSRP is a "suggested" price. Pretty good suggestion because buyers are mostly paying it!
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