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    Depreciation of the Porsche 996

    On the Deutsches Porsche Board there has been an interesting discussion of what might account for the marked
    depreciation of the 996, which is so atypical of the 911.

    Factors which were brought up were the overproduction of the 996 relative to demand, perceived poor quality for the
    price, growing competition in the limited sports car market, and the growing percentage of customers leasing rather than buying.

    I think leasing may have substantially broadened the market
    of the 911, and sports/luxury cars in general. What was once bought by the wealthy and hard core enthusiasts could now be bought by a much larger segment of the population.
    The supply increased to meet this new demand. But instead of the "old time" buyer keeping their 911 for 7 years on average, it's now flipped for what's new and hot every 2 to 3 years. There may also be a change in the mentality of the buyer as well as the leaser. It seems that more and more people are turning over cars quicker, to get the latest style, latest technology and most hp. Or maybe as these cars get more complex, people feel that they are too costly out of warranty. But either way these factors create an overabundance of late model sports cars hitting the market every year, far outstripping demand.

    I bought my 996's without a care for the depreciation. I plan on keeping them for as long as they thrill and challenge me. But the cost of depreciation will eventually catch up with me. So what will the future hold for the 997?
    I envision it may not be that different from the 996!

    Peter
    04 GT3
    01 996TT

    Re: Depreciation of the Porsche 996

    Leasing for sure.

    Tom

    Re: Depreciation of the Porsche 996

    Quote:
    Peter H(Chicago) said:
    On the Deutsches Porsche Board there has been an interesting discussion of what might account for the marked
    depreciation of the 996, which is so atypical of the 911.

    Factors which were brought up were the overproduction of the 996 relative to demand, perceived poor quality for the
    price, growing competition in the limited sports car market, and the growing percentage of customers leasing rather than buying.

    I think leasing may have substantially broadened the market
    of the 911, and sports/luxury cars in general. What was once bought by the wealthy and hard core enthusiasts could now be bought by a much larger segment of the population.
    The supply increased to meet this new demand. But instead of the "old time" buyer keeping their 911 for 7 years on average, it's now flipped for what's new and hot every 2 to 3 years. There may also be a change in the mentality of the buyer as well as the leaser. It seems that more and more people are turning over cars quicker, to get the latest style, latest technology and most hp. Or maybe as these cars get more complex, people feel that they are too costly out of warranty. But either way these factors create an overabundance of late model sports cars hitting the market every year, far outstripping demand.

    I bought my 996's without a care for the depreciation. I plan on keeping them for as long as they thrill and challenge me. But the cost of depreciation will eventually catch up with me. So what will the future hold for the 997?
    I envision it may not be that different from the 996!

    Peter
    04 GT3
    01 996TT



    All valid reasons. Unfortunately the buyer pays the financial penalty and Porsche laughs all the way to the bank.

    The question is what does Porsche do about this situation assuming it cares? Ultimately it will hurt sales. Their reputation has had a detrimental effect on the CGT and 997. Many cancellations and residuals on the CGT after 5 years are around $140,000. Sad very sad.

    Re: Depreciation of the Porsche 996

    IMHO Porsche saw the opportunity to widen the appeal of the 996 to a much larger market segment, to the broader sports/luxury GT market. Favorable leasing arrangments meant that many customers, that otherwise could not afford to buy the car, could now swing the lease payments. They turned out to be right, and the 996 was the most successful 911 to date. The hard core sports car/911 enthusiasts now
    makes up a smaller percentage of the 996/997 buyer as compared to the 993. The downside of this success is the markedly increased turnover in late model year cars. The "old time" 911 enthusiast may still be
    holding on to his car for 7 years. But the larger segment sports/luxury GT buyer and leaser are turning them in every 2-3 years. This floods the market and depresses the value.

    Ferrari is at a much higher price point which makes them difficult to afford even in a lease and keeps the number of units sold low. It obviously also helps that Ferrari limits production. Their resale is also helped by the fact they are rarely used as daily drivers and thus have limited mileage. If Ferrari produced an "affordable" 85k model (Mondial) which could be more readily used as a daily driver, their resale may not be better. ie. Maserati?

    If the Cayenne and upcoming sedan/coupe can attract some of these sport/luxury GT buyers away from the 997 and if Porsche can control production , the future resale of the 997 may be better. And hopefully this even broader market
    of cars can further increase their profits so they can resume their racing efforts. And we can then enjoy their
    efforts through street versions of the GT3, ?GT2, and ?GT1!
    I can dream can't I!


    My .02
    Pete

    Re: Depreciation of the Porsche 996

    Very interesting & informative point Peter .

    Re: Depreciation of the Porsche 996

    Quote:
    Peter H(Chicago) said:
    Ferrari is at a much higher price point which makes them difficult to afford even in a lease and keeps the number of units sold low.



    Affordablilty has nothing to do with it, Ferrari sells every car they produce, most with waiting lists. Your next sentence was the key - - low production volume. And as to mileage, even high mileage 360s hold their value better than equivalent mileage 996s.

    Gary

     
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