718 Cayman GT4 is here – at long last.!

[ralphmusic]

Jeff,

It is all down to transfer pricing so are they keeping all the retail profit in Germany and attributing no value add on car sales to the UK subsidiary? The AG numbers will be consolidated home and other markets served by subsidiaries.

Having designed and successfully defended transfer pricing arrangements within the EU, USA and China/Hong Kong I’ll bet they allow retail profit to arise in the UK therefore landed and dutiable value will not justify attributing a 10% price rise to 10% import duty.

It does not mean that they might not do it but I know of orders placed without that 10% warning, not that that means anything given the standard contract wording reserving seller right to increase prices.

On currency, they will have purchased at least annual cover for GBP/Euro at a fixed or semi fixed rate, depending on their view and price stability horizon.

As a final thought, with German PMI around 43% (down from 57% in last 12 months), China starting to favour local car manufacturers, some German suppliers of capital manufacturing going into liquidation, and the high value/margin options typically specified in the UK market, they might want to keep the golden goose a’laying

Ralph

 

[ChrisW]

Jeff,

Import duty is levied on landed cost, so the question is does Porsche GB make a profit on sales of new cars? Import VAT will be due but that is recoverable input tax.

Ralph

As far as I am aware nobody in the UK can recover vat on cars.

The only vehicles where vat is recoverable are commercial vehicles bought by a vat registered entity, or 100% electric cars where there is no private use. Of course this may have changed since I tried to recover the vat on a BMW i3 five years ago !

 

[ChrisW]

Jeff,

It is all down to transfer pricing so are they keeping all the retail profit in Germany and attributing no value add on car sales to the UK subsidiary? The AG numbers will be consolidated home and other markets served by subsidiaries.

Having designed and successfully defended transfer pricing arrangements within the EU, USA and China/Hong Kong I’ll bet they allow retail profit to arise in the UK therefore landed and dutiable value will not justify attributing a 10% price rise to 10% import duty.

It does not mean that they might not do it but I know of orders placed without that 10% warning, not that that means anything given the standard contract wording reserving seller right to increase prices.

On currency, they will have purchased at least annual cover for GBP/Euro at a fixed or semi fixed rate, depending on their view and price stability horizon.

Maybe they weren't prepared to pay what it would have cost to hedge for the currency changes of every level of Brexit.

And don't forget, the EU have just reached a trade deal with Japan so that complete cars can be imported from Japan without duty ... so why continue to manufacture in Europe ?

As a final thought, with German PMI around 43% (down from 57% in last 12 months), China starting to favour local car manufacturers, some German suppliers of capital manufacturing going into liquidation, and the high value/margin options typically specified in the UK market, they might want to keep the golden goose a’laying

Ralph

Well it lost my words !

1. Maybe Porsche didn't want to pay what it would have cost to hedge for all levels of Brexit (or not)

2. There is a new trade deal between the EU and Japan, so I believe complete cars can now be imported from Japan duty free ....

 

[ralphmusic]

Chris,

Hedging currency is normal business practice when your input cost currency is different to your income currency, Brexit is irrelevant as they are just de-risking mismatched trading cash flows and providing a stable local cost base for pricing decisions.

The EU/Japan FTA has each sides' import tariffs declining over a 6 year period

Ralph

 

[MrDemon]

Jeff,

Import duty is levied on landed cost, so the question is does Porsche GB make a profit on sales of new cars? Import VAT will be due but that is recoverable input tax.

Ralph

As far as I am aware nobody in the UK can recover vat on cars.

The only vehicles where vat is recoverable are commercial vehicles bought by a vat registered entity, or 100% electric cars where there is no private use. Of course this may have changed since I tried to recover the vat on a BMW i3 five years ago !

most big wigs claim VAT back, they buy the car as a pool car claim the VAT and then let no one use the pool car bar them.

VAT loop holes, but they pay the VAT back when it's sold.

 

[ChrisW]

More importantly does that hep them to avoid the Benefit in Kind ?

 

[Motorhead]

UK Dealership allocations for the 982 GT4 appear to be thin on the ground. From general forum feedback on here and elsewhere my feeling is that it's only about 2 or 3 cars in the initial batch, but I'm probably wrong. Does anyone have any specific information about the number of cars that have been allocated?

With the annual shut-down coming to an end in the next few weeks and Cayman production being moved back to Osnabrück I would imagine that the first of the new GT4s could be arriving here in September/October.

Jeff

 

[geoff lane]

UK Dealership allocations for the 982 GT4 appear to be thin on the ground. From general forum feedback on here and elsewhere my feeling is that it's only about 2 or 3 cars in the initial batch, but I'm probably wrong. Does anyone have any specific information about the number of cars that have been allocated?

With the annual shut-down coming to an end in the next few weeks and Cayman production being moved back to Osnabrück I would imagine that the first of the new GT4s could be arriving here in September/October.

Jeff

Jeff

My understanding is you are correct OPC's have 2 or 3 cars per dealership for 2019 and slightly less Spyders.

The Spyders will be out first in September followed by the GT4's. Don't expect GT4's until mid / late October.

I have been told realistically GT4's are likely to be November (after end of Oct if Brexit is no deal) and that Porsche are not going to cover any import tax.

My OPC has 3 cars this year and Exeter OPC told me they had 2 so assuming the rest are similar then your assumption is correct.

If you look on the configurator it says the cars will be limited availability so while I understand what has been said by Porsche regarding availability the same was said when the 981 GT4 was announced, I suggest this time it will be similar maybe a few more cars because of extended manufacturing for the 718 range but I doubt everyone who wants a new one will get one.

 

[Motorhead]

Thanks for that Geoff.

Disappointing to hear that Porsche do in fact plan to pass-on any additional import duty despite Ralph's encouraging comments above. With the German economy heading downhill - along with vehicle exports - you'd have thought that they would have tried to absorb the duty in whole or part, but we'll just have to wait and see how the whole Brexit fiasco pans-out come October.

I concur fully with your comments about GT4 availability, and with the likelyhood of 718 production continuing through 2022 or maybe 2023 potentially there's an opportunity to produce more GT4s this time around.

Jeff

 

[aholymanjones55]

I was at a Porsche Reading event on Thursday. They had a Speedster on display. It’s one of three they have been allocated!

To Dec 19 they have 3 x GT4 and 3 x Spyders allocated. So this sounds like a uniform allocation based on earlier posts.

To say thin on the ground is an understatement. Plenty of bent up demand but a trickle on the supply side apparently. Hoping it will ease a tad when PDK models come along.

cheers

 

[ralphmusic]

Comparing the price of a GT4 and options in Germany with UK pricing is interesting.

Equalising base car spec (some German options are included with the UK base car), UK is £75,348, in Germany €100,020 (€96.2k car + €3.8k options to match UK car spec) - a ratio of 1.00:1.33. UK cars come with Car Play, Navigation, Digital Radio, Tracker, Interior Alarm and Grey Top Tint on Windscreen - these are options in Germany costing €3.8k

Options pricing is consistently UK 1.00 : Germany 1:41

Clearly exchange rate is a factor but there is a fundamentally different approach to pricing driven by market characteristics, just as there is in German v USA pricing. I guess UK cars are more generously specified and maybe base and options pricing need to be competitive/affordable?

 

[Motorhead]

Ralph,

I presume the spec and retail price are decided by the UK importer, Porsche Cars GB (I don't know what influence it's wholly owned subsidiary the Porsche Retail Group has on these). Highly unlikely I'm sure, but Porsche could always choose to down-spec the cars cars slightly in the event of a 10% import tariff to maintain the current retail prices. As manufacturers are always keen to point out, prices and specifications are always subject to change ... without notice.!

Interesting to learn that the cars are significantly more expensive in Germany; I note also that the German equivalent of VAT is 19% compared with 20% in the UK.

Jeff

 

[ChrisW]

So vat is broadly equal ...

Transfer pricing is illegal ...

And Porsche are already subsiding the UK market by comparison to Germany, as they have consistently done in the USA ...

And you can therefore bet that Porsche will allocate cars where they can make the most money ...

Demand, profit .. and matched supply.

It seems that they are only trying to keep the UK market warm.

I wonder how Porsche and their dealers will handle the modern collectible market potentially going into free-fall once the massive number of GT and other special cars can no longer find true enthusiast owner homes (rather than the enthusiast plus the investor owner volume that they currently have).

Add into this the on-going GT3 engine issue -- yes at Knockhill another GT3 appeared to suffer it's third engine failure in 17000 miles --- Porsche appear to be walking on ice. I assume that Porsche believe that the new engines they fit should prove to be reliable before future customers worry about the proximity of the end of the 10 year warranty ? For this reason they must believe that the collector market is very valuable because they don't get driven !

But consider this. If I plan to keep a car for two years, and I expect the next owner to do the same, once a ten year guarantee is five years old the risk begins to have a material affect on car values ....

Porsche really need also to get a handle on this.

The 918 engine is known to be very very robust and fitted to the 718 GT4 Clubsport versions.

The new 992 718 GT4 engine is a complete unknown ... I hope Porsche have done their homework because they no longer have the best track record.

Would I express such fears had they allocated me a 718 GT4 ? Possibly not ... but isn't this the real danger of Porsche alienating their traditional customers as they currently are ?

As an aside, at Knockhill with passenger in my car I got into the .58's. Deduct from this time the 1.5 to 2 seconds advantage of PSCups over my Pilot Super Sports (I expected rain) ... and my GT4 in my hands is already faster than the new 718GT4 in Walter Rohl's hands ... and yes I have only been to Knockhill twice.

Porsche, let me buy a 718 GT4 RS with PDK and I'll give it try ....

But tell me that I'm not a loyal enough Porsche customer, and I'll work to keep my car better than Porsche's without spending too much money whilst keeping it GT3 road compatible --- and quieter.

Dare I buy a GT3 ? Not yet.

 

[ralphmusic]

Transfer pricing is not illegal.

 

[ChrisW]

It was when I last asked HMRC ... working between our Swiss manufacturer and our UK distributor ...

 

[ralphmusic]

Transfer pricing is a term used to describe the pricing applied to goods or services traded between related parties domiciled in different tax jurisdictions. I'm not sure what question was posed to HMRC but having implemented a number of arrangements, I am happily still at large.

 

[AndrewCS]

As an aside, at Knockhill with passenger in my car I got into the .58's. Deduct from this time the 1.5 to 2 seconds advantage of PSCups over my Pilot Super Sports (I expected rain) ... and my GT4 in my hands is already faster than the new 718GT4 in Walter Rohl's hands ... and yes I have only been to Knockhill twice.

Porsche, let me buy a 718 GT4 RS with PDK and I'll give it try ....

But tell me that I'm not a loyal enough Porsche customer, and I'll work to keep my car better than Porsche's without spending too much money whilst keeping it GT3 road compatible --- and quieter.

As a Knockhill spectator yesterday, viewing on the start / finish line and into Dufus (turn 1) ... your car was looking & sounding superb. The note was extremely `linear` and less `harsh` than the other GT4`s, no `popping` either.

Keep up the development [s1]

 

[ChrisW]

Transfer pricing is a term used to describe the pricing applied to goods or services traded between related parties domiciled in different tax jurisdictions. I'm not sure what question was posed to HMRC but having implemented a number of arrangements, I am happily still at large.

I never met a UK taxman who was happy to reduce a profit or increase a loss in a UK taxed company by increasing the profit or reducing the loss in a related company in an overseas domain ... yes there are licensing agreements, but these are now coming under scrutiny ...

 

[ChrisW]

As an aside, at Knockhill with passenger in my car I got into the .58's. Deduct from this time the 1.5 to 2 seconds advantage of PSCups over my Pilot Super Sports (I expected rain) ... and my GT4 in my hands is already faster than the new 718GT4 in Walter Rohl's hands ... and yes I have only been to Knockhill twice.

Porsche, let me buy a 718 GT4 RS with PDK and I'll give it try ....

But tell me that I'm not a loyal enough Porsche customer, and I'll work to keep my car better than Porsche's without spending too much money whilst keeping it GT3 road compatible --- and quieter.

As a Knockhill spectator yesterday, viewing on the start / finish line and into Dufus (turn 1) ... your car was looking & sounding superb. The note was extremely `linear` and less `harsh` than the other GT4`s, no `popping` either.

Keep up the development [s1]

Thanks for this ... it was quite a tough ask of Jens Ehresmann that any exhaust design should give me more power and less noise ... hence I'm very happy to feed all evidence (in both directions) back to him. So far at Snetterton and Donnington it's -3dB ... so far it appears to be working, thanks again.

 

[Motorhead]

Chris,

A 3dB reduction is a halving of the sound pressure level (I assume that's an A-weighted static measurement at the tailpipe?). Jens has done a good job there, especially since apparently you've still got good sound quality (one of my hobby-horses!).

As a sound and vibration measurement and analysis specialist I always cringe at the crudity of exhaust noise assessment at track days, with some bloke waving a sound level meter around in the vicinity of the tailpipe during a static test while you hold the revs at some arbitrary value - hopeless! Track-side measurements provide a much more sensible and realistic environmental assessment of vehicle noise in my opinion, although they're not always popular with track day participants.

It'll be interesting to see how the new 982/718 GT4 and Spyder fare at the circuits next year now that their revised exhaust systems incorporate GPFs and meet the latest environment noise standards. We should get an indication how your modified GT4 compares with both the standard 981 and 982/718 cars. Anglesey perhaps?

Jeff