Will Porsche do themselves in?
 

Does anyone think that Porsche will do themselves shortly with so many cars available? During most of the 90s Porsche only had 2 or 3 cars to choose from. Now there is the Boxster(and the S),911(there are currently eight models soon to be nine),Cayman S,Cayenne(Cayenne,Cayenne S,Turbo and Turbo S),Carrera GT, GT3 and GT2 and soon to be Panaroma(I think that how you spell it) and talk of a new 914. Do not get me wrong,I have liked and enjoyed every Porsche I have been in(including 944s). I think that Porsche is making their market too big for a entry level sports car at $45k(Boxster) and the entry level Cayenne at $42k. I do not think that the majority of the population has this much money to spend on a car,especially a entry level non optionally equipped car. Now from a manufacturing standpoint why do they have the Cayenne Turbo and the Turbo S? Is the 0-60 in 5.2 seconds not enough,the Turbo S hits it in 4.8! That can keep up with their legandary 911! Shouldn't Porsche just make the Turbo S and knock the Turbo out the window? Just wondering if Iam the only one feeling this way.

I think the consumer is "driving" this response from Porsche.

It's so difficult to say. But we must recognize the fact that the Cayenne SUV has been a huge success. Introducing cheaper/entry level cars and hi-end sedans won’t be has harmful as long as they promote and support factory and independent racing teams. If they do that I think the brand promise can still be maintained. But all bets are off if they come out with a Corolla.


04S
bob

Interesting question, Blinkwatt.

Mercedes comes immediately to mind as a cautionary tale. The brochure for the MBZ model year 1969 featured a grand total of six different vehicles. In the decades since, the number of models has increased dramatically, and by many accounts, the quality has *decreased* just as dramatically. Coincidence? I'm not sure. But during this expansion, and even before the merger with Chrysler, the quality and luster of this once revered nameplate has dimmed considerably.

My '69 280SL, with 160,000 miles is astonishingly solid, dependable and sure of the road--especially for a 30+ year old car. When it came time to buy another car last year, looked at the new MBZ's and went with the Porsche.

It's good that Porsche is broadening its product line, but hopefully, it will remember that quality and reputation take decades to achieve and can be undone very quickly if it loses focus of its core values and strengths.

I don't know if they'll do themselves in or not, but despite your list of cars, there are only a few platforms involved.

Correct me if I'm wrong, but the 986 and 996 were designed concurrently...with at least everything in front of the doors being "the same."

I'm assuming the 987 and 997 have been similarly designed. The Cayman is a hardtop 987, No?

The GT3 and 2 are just upgrades, for all practical purposes.

The Cayenne platform is from VW. Toureag (sp?), and again, the engine and suspension changes are just options, no matter how the marketing people spin it.

I work for Ford, and they sell a bunch of F250s. I can make a similar case that they currently offer more versions of it than the number of Porsche models offered throughout it's entire history.

But then, they are doing themselves in.:)

-James
'01 Boxster S

I don't think it's a problem as long as performance is the target and each line is reaching a different market and they don't step on the toes of the 911 buyers. The Boxster is "entry level". The Cayman is for people who want a two seater, hard top performance car. The 911 is the star of the family for the guy who wants a performance car and can afford the best. The GT series are for the true racers. The Cayenne is for people who need an SUV but don't want to sacrifice performance. The same will be of the Panamera with people wanting a four door sedan without sacrificing performance. (Btw, I believe the 914 thing is a rumor since the Boxster is basically the 914 with modern features.)

As for price, have you seen what American cars sell for now? Given the choice between a Chrysler Crossfire convertible at $35K-$40K and a Boxster it's no contest. As for SUVs, they all start in the $30-$40K range now so the superior Cayenne is pretty close, especially when you get into the large or specialty (Escalade, H2, etc.) SUVs. My daughter has wanted an Escalade since she saw them and I told her I didn't believe it was worth the money. Then she saw a Cayenne when we were in London and she said "that's a really cool SUV, what is it". I told her it was a Porsche and about the same price as the Escalade. From her experience in our Porsches she immediately changed her mind and said "that's what I want."

I believe with anybody, if they can get a car buyer to drive the Porsche that's physically comparable to whatever they are looking at, that's it. They will figure out how to come up with the extra few $$ to get into that car and have that feeling every day. I bet everyone here remembers the feeling of their first Porsche drive.

Porsche isn't a car.....it's an experience. Once you have a Porsche, you never want to be without one.

From what I understand about Porsches history the early to mid 90's were one of the hardest times for Porsche financially. It has been since they brought on the Boxster that they really became solid and since they introduced the Cayenne that they have really gotten back on top of their game. Heck, they just purchased a good chunk of VW. So with the introduction of each new model they seem to be doing a bit better. Eventually, maybe they will have such a large line that they are viewed as more of a "BMW" or "Mercedes" kind of company. Is this bad? Who knows, only time will tell. And as long as I have my Boxster, I'm happy as a clam.

As long as Porsche retains exclusivity, I will be happy. The reason I don't drive a Merc or a BMW is because every soccer mom, geriatric and young kid who was lucky enough to get a good job out of college has one. Also, because (this is where you say it with a Darth Vader voice) "THERE IS NO SUBSTITUTE!"

The company's never been healthier (I read recently that they're the most profitable manufacturer in the world?) and they really only have 4 models: Boxster, Cayman, Carrera and Cayenne. All the other S, Turbo, etc. designations are effectively just options.


As for having a Turbo and a Turbo S in the same line, I suspect that "S" is a high margin letter for the people who really have the money.

It’s certainly true that Porsche has the highest margins in the industry. It’s clear that Porsche management knows how to make a Euro! It’s also clear they are expanding into other segments. What’s not clear is why?

As they are now the largest or second largest share holder in VW, the other being the government of lower Saxony. They have access to one of the worlds largest distribution channels. As well as an extensive parts bin, Audi, Bentley, VW, Lambo, Bugatti, and a few others I'm sure. A future of hi-volume products seems likely.

We can only hope that Porsche management continues to produce products that justify the price point. If Bentley and Lambo are indicators I'm sure we'll all be pleased with the future .....we just might not be able to afford it.


04S
bob

its easier to build 4 good cars than 9 good cars. But its also riskier to have a small product line. Sounds like the Porsche guys are changing their outlook and diversifying the risk.
Porsche has to be careful IMHO because the Porsche brand is exclusive. Even the Boxster at $50,000 is a very expensive car by what its main competitions can offer on paper. Introducing low cost cars or having sigificantly more cars on the road is going to cut into the 'exlcusivity' that appeals to so many new P-car buyers.

Hi,

From my experience, Exclusivity seems to be much more important to Porsche Owners than just about any other group of Enthusiats, except maybe Ferrari Guys.

As I've said before, Badging means nothing to me at all. I owned my last Porsche in 1983 ('67 912). Since that time, I've owned 2 Lotus, a Jag, and one Ferarri. My Esprit is one of 61 made, that even more exclusive than the 550 Spyder!. I don't own it for that, I own it for how it drives!.

If I came across a car with the Styling, Performance and Feel of my Boxster, I wouldn't care if it sported a Yugo Badge, it would still be an Excellent Car, and one which I would want to own.

Porsche doesn't care if you want Exclusivity, you are not a Customer of theirs, you were, they already got your money. They're going after the guy who has yet to own one, and an Entry-Level Car is a way of accomplishing this. Besides, moving the Brand toward the Center of the Market allows them to expand their line into other types of Cars in the Future as well. And, who nows where the Porsche/VW relationship will go in the Future? It is already rumored that in addition to the 18.5% stake Porsche already has, that they're likely to pick-up another 3%-5% in '06. Consolidation is a mainstay in Business Strategies, so a move in this direction would not be at all surprising either.

All this Chicken Little - The Sky is Falling retoric is kind of Silly. A little Reality Check - Porsche is going to do whatever they think they need to in order to sell more cars and to increase their Shareholders Equity. That's what they're in business for, not to satisfy your demand for Exclusivity...

Happy Motoring!... Jim'99

Yep Porsche and Ferrari have very exclusive image brands no point in arguing whether its a belief held only by its owners or the public at large or if its good thing or a bad thing but its definitely driving new and used sales. The same can be said about most first time Mercedes owners I've known over the years.


Actually I personally never really wanted a Porsche. I wanted a 944 back a long time ago because I thought the 944 had a modern look about it vs. the bettle-looking 911 which I always found to be boring back then. I was recently reprimanded by a female friend for driving "such a fancy car". I told her if I wanted a "fancy car" I would have bought a BMW or a Merc. I have a sports car not a "fancy car".

Actually they do care. Lets face it the people on this forum are not the "typical" Porsche buyer. The typical, American, buyer buys it for status and will no longer buy the car if it looses that status. They drive the cars in major cities, rarely seeing the open or back country road, and I doubt they ever come close to pushing the car to its limits. Just today I saw a yellow Lambo driving around DC. Do you REALLY think that person was driving the car because of its performance?

Rob

I will go back to one of my earlier comments.

Never overestimate the executive management of auto manufacturers. The industry's histroy is one of over-reaching, over-diversification, major product mistakes, strategic and tactical blunders.

Porsche management is not immune to this disease. In many ways, one COULD assert that the thought that their management team can turnaround VW is a major act of hubris.

Of course, VW management is not a tough act to follow, but Porsche mangement has been successful with three model types. That is fine, but it doesn't make them Toyota either.

Time will tell.

As Elmer Fudd would say, "be very quite, I'm hunting rabbits!

Correction!!
 

Not exactly...I think he said..."I'm hunting wabbits"!!! :) :)

I would suspect that Porsche might disagree with your statement.

No manufacturer simply forgets or chooses to ignore someone ( let’s call this purchaser a “Customer” for the sake of it ) that has already bought a product and stays in business too long.

I would say Porsche very much considers anyone who has bought a car a “Customer”. Certainly they hope you will consider spending money again on another of their products. Certainly they count that you will frequent their dealer network spending on service and parts. In effect adding to the bottom line indirectly of purchasing another vehicle.

I sure they consider any current Porsche owner to be important if that “Customer” does nothing more then publicly display the product and answer questions from potential new car buyers.

Finally if they don’t care about marketing a exclusive product why not make cars that cost ¼ the cost of the boxster ( forget about performance and styling ) and just sell four times as many. The same net result relatively speaking, no?

I suspect that building a vehicle ( or line ) that have some very specific performance characteristics, characteristics not commonly found on other alternatives, is something that they have chosen deliberately. By definition this is a exclusive practice.

And a slogan like “There is no Substitute” … Smacks of exclusivity doesn’t it?

Actually you are correct!

Good one!

:)

I too, agree that Porsche does care about exclusivity. That is why they have not introduced the "Wagon S"!

Hi,

OK, maybe you're right, I may have misstated Porsche's concern for exclusivity, but to what degree?

The allure of Unit Sales, Expanded Markets and Profits is a strong one, and never more strong than to a Company which is tasting Strong Profits for the 1st time in a long time.

Porsche introduced the Boxster and 914 amidst cries of discontent from the Faithful, even the Cayman will have a dilutive effect on the Flagship 911's sales. With all the Cars they've been selling the past few years, they must be concerned about saturation. If so, what to do? Expanding into new Markets seems to be the most prudent thing to do, and there's much more of a Market moving to Center than away from it.

I'm not even sure that this is a Bad Thing, except for those who want to remain Exclusive. Frankly, I don't comprehend this, I don't feel the least bit exclusive owning a Porsche. It's a very nice Car, but after all, it is just a Car.

Unfortunately, Public Ownership of Companies brings with it an unfortunate necessity, namely posting positive numbers every quarter. Gone are the days when a small group of Owners or an Entrepreneur will take a longterm view and choose to forego Profit in the short term. Add to this that most Senior Managers and Directors Incentives are based more on the Stock Price of a Company. This can cloud their judgement, we've seen this time and again in recent years. They certainly are acting this way with respect to some of the Quality issues which have plagued the Company for the past 5+ years - Major Quality issues, No Recalls, Preserve Profit... to Hell with the Owners.

Porsche is now a very large company and so one should expect that they'll act the part. This means, that the Bygone days are just that - gone. Of course, this is all speculation, but, it will be interesting to see in which direction they actually head...

Happy Motoring!... Jim'99

Porsche has done OK lately, I think their CEO was named Automobile mags man of the year for taking a Porsche, that was in the red, and turning it into one of the most profitable makers around. Somebody did something really right by bringing in the Boxster/Carrera co-design, the Cayenne, etc. It HAS worked.
The future? Four door sedans? I'm not so sure. They are seemingly adding a lot to the mix at one time. Hope it works -

Don't forget also that the 'new' Sedan will feature Cayenne mechanicals.

Exclusivity?

I'm used to seeing 50 C5 vettes before I see another Boxster, and then yesterday I pass two Boxster S s and then a regular one on my way to work. :) Kinda neat.

-James
'01 S

Hi,

All good points! One thing which has not been mentioned is the impact the Cayenne has had. It has contributed much more to Porsche's Sales Numbers and Profitability than the Boxster has, which has shown some declining sales of late.

This means that Porsche has gained momentum from exactly what I am saying, New Markets. The Cayenne created a whole new segment of Porsche Customers who would most likely have become Owners of MB, Lexus and Accura had they not had a Porsche to choose from - they were not likely to buy a Boxster or 911 instead.

The Cayenne is almost solely responsible for Porsche's turnaround, this very fact is even cited in one of their recent Annual Reports.

In other words, Porsche became Profitable by designing and producing something other than a Sports Car. I suspect that this lit more than a few Lightbulbs in the Minds of Porsche's Directors.

I'm not saying that Porsche will ever turn it's back to the Sports Car Market, just that there is a strong incentive to move in other directions as well, and at the same time...

Happy Motoring!... Jim'99

THe funny thing is that by building so many Cayennes they have killed two birds with one stone: they've majorly increased revenues(40% of sales that were non-existent pre-Cayenne) which makes the 911 more 'exclusive' or uncommmon relative to their overall production.
Where as in the past the 911 was the car they sold the most of, its now fewer in numbers than the 1-2 punch of the Cayenne and Boxsters.

Kind of brilliant when you think about it.


But I think that they may want to take a hard look at being so reliant on the Cayenne. Nearly half of all sales on SUV's is not a plan for the future. The $3 a gallon future is going to affect this segment of the auto industry, whether that will be a concern at all for someone spending such a large sum on an SUV of all things, is a seperate matter.
Building HIGH end/low volume Sedans like Merc is a better strategy than going after the low cost/high volume "sporster" route. A better way of bringing more revenue while preserving the prestiege of the "there is no substitute" brand image. Porsche can really capitalize on the 'perceived' advantage that a Porsche will always out-handle, out-corner, out-brake any car made by BMW or Merc. A Porsche sedan will make a Merc or BMW sedan seem old school by comparison.
KInda like lining up a Maserati Quatroporte next to an S class. I know which I would rather take for a day trip with 3 passengers.

Hi, it seems like the bottom line is Porsche wants to sell more units. They all want to sell more units! I want to sell more units and I don't make cars! This isn't a bad thing as long as the quality and feel that Porsche markets stays within the tolerances of the folks that consume them. Some might argue that quality has been a bit iffy at times (RMS). But, they're moving more metal than ever.

History suggests that if they misfire a few times on products it won't be the end of the (Porsche) world.

There is a chance that VW involvement might give P-management the expansion and reach they appear to be "jonesing" for. Or, this could all be defensive and aimed at avoiding a take-over by a larger firm/competitor?

Whatever the case maybe, I'm sure that the P-management team has gotten very accustomed to that high valuation, and the bonus that it generates. They'll do what they need to do to preserve it.

I, and I'm sure all of us, wish them continued success.



04S
bob

Hi,

On one hand, this threads begins on a cautionary note about Porsche expanding their product line as a potentially Bad Thing and now it shifts to praising Porsche for doing so.

As you infer, a 40% increase to Sales is a Good Thing. But, I'm not sure I follow the Logic which says building 100,000+ SUVs somehow makes a Sibling GT Car more exclusive.

Porsche has never limited production of the 911 or the Boxster. Pretty much anyone who can afford and desires one can get it.

You may be confusing Market Demand with Exclusivity. If Demand increases for these Cars, as a Mass Producer, Porsche will meet this demand, albeit by increasing their own production capacity, or subcontracting production to others, which they have a history of doing. Any percieved exclusivity stems mainly from the limited number of potential Owners who both desire, and can afford them.

Marques such as Pagani, Ferrari (esp. the Enzo, FXX and F430), Aston Martin, Bentley, or Maybach are Exclusive. These Companies have decided to produce only set number of a certain model making them truly exclusive. Porsche is a Mass Producer. Referring to them as a Boutique Carmaker leads to confusion.

While there is no hard definition of what a Boutique Carmaker actually is, it is generally considered to be one which makes 100-4000 Units annually. Also, Parts-Sharing (using other's Engines, Transmissions, Suspensions, Brakes, etc.) and Hand Production are attributes often associated with these kind of small manufacturers. One of the Dictionary definitions of Boutique is: a small company that offers highly specialized services . These are not definitions which closely match Porsche at all.

Throwing this term about so loosely alleviates some of the responsibility Porsche should shoulder as a Major Manufacturer, such as addressing the various serious quality concerns raised with several late models. We as Customers should not be so quick to let them off the hook, especially in light of their Industry leading Profits.

I came across an interesting article from the Aussie Car Magazine Wheels about BMW, in it they state:"... Here's the problem: BMW is a boutique automaker -- meaning it produces and sells fewer than 800,000 cars a year. And though the company clears a healthy 9.1 percent profit on those cars -- and 675,076 sold last year -- truth is, it can't do that forever and grow in an increasingly competitive global auto industry..." Now, I doubt anyone here considers BMW to be anywhere near a Boutique Automaker. For the same reasons neither is Porsche...

Happy Motoring!... Jim'99

I agree for the most part and that 'boutique' is a crutch that some companies like Porsche can pull out to blame the fact that they can't make a state of the art stereo for their car! But truth be told in comparision to other mass producers of cars they do their sales thing very much like a boutique automaker. I can walk into any dealership that sells BMWs and go home with an 06 BMW once the dealer's 06 stock is in? No need to ever deal with any special ordering for my particular BMW like Porsche does.

and i'm not sure you can really compare 30,000 north American cars that Porsche makes with what 300,000 North American cars BMW builds? Now add in the Mercs, S2000's, and other sportscars that Porsche customers consider before buying a P-car then you see that Porsche is in a very unique position for a company still producing mass producer reliability.
Perhaps Porsche is not a true boutique manufacturer but relative to its competitors (who are profitable!) their numbers are teeny tiny.
As I stated previously trying to triple their production numbers can have some negative consequences even if it helps them to build up the bottom line.
They should take a good look at what Merc and BMW have been unable to do with low cost cars. The BMW ti comes to mind.

I think people purchase things out of necessity and out of desire. Desire plays a part even in necessity purchases but is maybe not as much a factor as function. Wanting to have something “special” is almost ingrained into American society. No one buys a Porsche out of necessity.

While you may not have chosen to own a Porsche for exclusivity you are part of a exclusive group of Porsche owners simply due to the fact of the number of this type of vehicle on the American highways and the price you must pay to be part of that group. Understanding that the expense of acquiring this type of vehicle is entirely relative.

I’m sure there are Pcar owners that buy the vehicle strictly because of the “cost” status symbol it represents, while others may be in the “performance” status camp. However, I would think we all categorically fall into one or the other ( or possibly both ).

I think Porsche is diluting its cars to increase sales in the mass market as the (lower-priced) competition creeps closer and closer in performance. Cars in general are getting so good -- and so fast -- that the day will come soon where you won't have to pay Porsche prices to get Porsche performance.

Hi,

Excellent Point !! Increasingly, there is less Exclusivity with respect to Performance. This is Not something Porsche can choose to ignore...

Happy Motoring!... Jim'99

That maybe true. But, it their job to make sure that Porsche sports cars meet customers expectations. To-date they have. I believe they'll continue to do so. You may have to work your way past sedans, stationwagons and minivans in the show room to get to them-but they'll be there. And, they'll be great, and expensive as always.

04S
bob

I think we are there already. The s2000 is much cheaper than the Boxster and the performance difference doesn't reflect the big difference in price.
Allot of guys I know who don't care what brand makes the car thought it was a no brainer and opted for the nimble S2000 without hesitation.

If you can already get Boxster performance at a much lower cost then obviously there are other facotrs driving demmand. And I agree, further 'diluting' the cars will backfire. The 2.7 is as small an engine as they should ever go, perhaps coupling that with a Lotus Elise type-bare bones ultra light weight targa top Porsche could be a good move. But a low cost version of the boxster with even less power would be a not good move in my opinion. Porsche has tremendous credibility from their LeMans achievements, they really need to be careful about that reputation for racing that they have established over 50 years.

Remember the Speedster?
It was created because the US Porsche importer (Max Hoffman, I believe it was) demanded an under $3,000 Porsche. Porsche shuffled from foot to foot and finally produced the Speedy in 1955, initially priced at $2,995, and in the process created an icon. It's an icon today anyway, although much less of one when it was in production. Even an $3k, it was DOUBLE what you would pay for a similar (engine size) MGA.
In the long run, if the customer base demands it, Porsche will build it.
The only thing is by the time the marketing gurus, the bean counters, and the 911 protectionists get done with it, it will probably be more like the 911 Speedster of 1990 (?), and ultimately an overpriced, underwhelming failure.

Interesting discussion about "exclusivity". Let me move away from semantics and throw in my two cents worth.

To me, exclusive means the number that you see on the road vis a vis other brands. Sure the S2000 is good car (no matter what you think about the low-end torque), but on my way into work I easily see a dozen of them every day. Z3/4's? Same thing. Mercs? It seems like every other car has the MB badge on the hood or grill. These cars have, to various degrees, become "commonized".

But when it comes to Porsches, here in Tampa I can use my fingers to count the ones I see in a week. If I limit it to 911's, then a month. And when I see one, even though I own one, my head still turns. And, to me, driving something other than what everyone and their brother (and aunt, uncle and cousins) is driving is part of the value of owning a P car.

And it has nothing to do with the cost of the car. In the lot where I work we have Mercs, BMW's, Jags, Lexus' galore - most of which cost close to or more than my boxster. (Hell, there are alot of pick-up's and SUV's that cost more than my boxster). But there is only one porsche. And it is still the car that everyone wants to see and ask about.

Of course, the fact that a Boxster is the perfect roadster with truly beautiful lines that are a work of automobile art are also huge factors. If the car were a piece of crap then it would be even more exclusive because noone would buy it, except maybe some posers until the reputation caught up with the reality. And that is something that the execs at Porsche have to keep in mind. Whatever vehicle they introduce into their product line has to live up to the badge.