Is it time for Porsche to rethink GT car production ?

[bobfair]

Porsche have launched some fabulous GT cars in recent months that appeal to many of us so I could not help wondering whether their long held policy of restricting the production/sales of GT cars is still appropriate.

They have given the latest GT cars a much bigger band width increasing their appeal. For example my current GT 3 is a better road car than the last one but is also faster on track making the car appeal to a wider audience so more people want one but you can not buy a new one unless you put your name down back in the Jurassic period and successfully jumped through a number of hoops. I am sure the same will apply to the GT 3 RS which looks like an awesome motor. Ditto GT 4

I imagine that Porsche could sell many tens of thousands more GT cars worldwide but they choose not to so why is that? Are the GT cars just there to make the brand look sporty so as they can sell the real money makers with the sporty brand association? I am sure that has been the case in the past but doesn't racing also do that for them so isnt it time to increase GT car production?

Surely there has to come a time when Porsche realise that the wild speculation/appreciation seen in GT cars because demand exceeds supply cant be in their interest or their genuine customers. Does it make sense for a GT 3 to shoot up in value or an RS to make massive premiums whilst a Turbo S value drops because they slightly oversupply the market?

Is it time for Porsche to have a rethink on GT car production levels? What do you guys think?

My GT 3 continues to delight. Roll on the first track day!!

 

[pwebb]

We are indeed living in strange times regarding the rising values of certain cars and Porsche are one of the most sought after brands because of their racing history and the artificially low production runs of the GT cars. And it becomes a self fulfilling prophecy as each newly anticipated car arrives. Letters of intent are sent before cars are off the drawing board by those 'in the know' and yet the people who get the cars are often the usual suspects who buy all the top of the range cars from the dealers. Witness the RS automatically going to 918 owners. What message does that send to a track day enthusiast who wants the ultimate Porsche? This is the technique scorned by many used by Ferrari with their halo models.

In the past we have seen a depreciation curve on the GT models, maybe not as strong as the 'run of the mill' cars but depreciation none the less. Owners were happy to use them as intended with the knowledge that they were getting fun out of the car without too much of a hit. Now many are becoming reluctant to use them as the rising values are pushing them into the hands of investors rather than drivers.

Of course Porsche are aware of the phenomenon but having been burnt in the past with over supply, perhaps they are being over cautious with production runs with the expectation that things will cool down when rising interest rates and other financial factors start to take effect in the UK where the problem is most acute.

Keeping supply just behind demand has served Porsche well in the past and a small adjustment on the GTs production runs would be the solution in my view. Speculators fall away quickly when cars are more readily available.

In the meantime, good to see Bob and other forum members with these cars booking up their track days.

 

[dereksharpuk]

Depreciation is a killer for a motor manufacturer. Also a bit like a curates egg. But their main task is to sell cars, thus with skyrocket depreciation (that is why I stopped buying 911s) buyers just don't want to throw money away, thus don't buy new. Of course the service side gains, but the sales manger does not. Ferrari have taken an interesting line and cut back significantly on production. Their cars are highly desirable. Conversely, Porsche build more and more and now talk of 400,000 units world wide. Compare that with a planned 7000 from Ferrari and you can see the difference. Personally, I think PAG can learnt much from Ferrari. Moreover, talk of a mini Boxster/MX5 rival with a four cylinder engine maybe dilutes he brand. Whatever, Porsche is not the Porsche of Yesteryear.

 

[pauljmcnulty]

We see this from a very British point of view. Porsche aren't primarily a sports car maker any more, but the division of VW that builds performance SUVs.

The growth in the emerging markets is where the money is, and Porsche will always be focussing on that first. The sports cars are now secondary, like it or not.

There was an interesting article in Car about Ferrari, who are increasing production to 10K per year over the next few years. It argued that selling all the tat like branded babygros diluted the brand and harmed it's image. Maybe it does in the UK, but they lap that sort of thing up in the new markets. The (British) interviewer seemed to miss that point entirely.

 

[bobfair]

The growth in the emerging markets is where the money is, and Porsche will always be focussing on that first. The sports cars are now secondary, like it or not.

I do understand that but if the objective is to sell more vehicles why not sell more of the ones that are in demand? Also why spend so much money marketing cars your customers can not buy.

My local OPC took 12 deposits for GT 4's but will only get 4 cars. Why stimulate a demand you don't want to meet? Is that really the best way of selling KN's to developing markets?

Could the issue be pricing? It seems to me that a GT 3RS at £130k is better value than a Turbo S at £150k

 

[Neil Haughey]

To be fair they may have been surprised by the incredible level of interest in the GT4.

 

[geoff lane]

Totally agree with Bob, in my mind if Porsche want to become a mainstream manufacturer then sell lots of SUV's make very good profits but continue to make ENOUGH GT cars don't make more than can be sold but manage the numbers this will enable the owners to have cars that hold value but still encourage them to be driven.
This vast increase in value has only really happened over the last 2 years when I bought the RS I expected it to hold its value even if driven around 4K miles a year. However when it increases in value in 18months by about 50% the point Bob makes becomes very real particularly if the money matters.
When I bought mine the GT3 was losing value each year not by much but it was and the RS was holding its value now look at them maybe its because they are the last of a type (now with PDK new engines etc) I don't know, will it continue again I don't know, it could have something to do with the economy interest rates etc. But these cars will not be driven as much as they should be and that is because of Porsche's strategy. That cannot be right for a company like Porsche even if they are owned by VW.

Ps let me sell mine before depreciation takes hold again !!

 

[fbr]

ORIGINAL: pauljmcnulty

We see this from a very British point of view. Porsche aren't primarily a sports car maker any more, but the division of VW that builds performance SUVs.

ORIGINAL: geoff lane

Totally agree with Bob, in my mind if Porsche want to become a mainstream manufacturer then sell lots of SUV's make very good profits but continue to make ENOUGH GT cars...

Whilst I think it's a bit daft that a volume car maker doesn't make enough sports cars to supply UK demand it doesn't seem to be at the cost of SUV production. Consider how readily you can stroll into your nearest Porsche dealer and buy a Macan of your choice.

How far is the problem local to Porsche UK? Especially given the current contraction in Chinese "emerging" market, the reduction in the Euro based economies at present, the Euro is worth about 73p, and it's ironic that the Geneva release of the GT cars is set against a total collapse of the Euro against the Swiss Franc.

Frank

 

[BigCat]

Well if you stroll into your local OPC to buy a Macan you can expect delivery sometime in late 2016 so not exactly off the shelf. Order any of the sports cars and you will get one in 3/4 months except a GT3, GT4 or GT3RS because those are all sold out.

 

[fbr]

But for a volume producer it does seem odd that Porsche UK make it difficult to buy the entry level SUV and impossible to buy the "top end" popular sports models. It appears that even the humble RHD 981 GTS is not so readily available at the moment.

Not sure about the 991 variants but the 981 models are hardly hand-produced. Note this extract from last year annual report: "In the past fiscal year, the Porsche AG group sold 155,094 vehicles. This corresponds to an increase in unit sales of 8 percent compared to the prior year. The main contributors to the increase in unit sales and revenue were the Boxster and 911 model series."

Given that the bare majority were SUVs (84,041) it still shows Porsche as a manufacturer are committed to serious sports car production. It still seems to me that Porsche UK are not seriously committed to selling them.

Frank

 

[bobfair]

I think the Macan problem and the GT cars are different situations. With the Macan I think Porsche are making as many as they can, they will let you order one and you will get it you just have to wait. At some time production levels will catch up with demand. With the GT cars Porsche chose not to make many, wont let you order one and have no plans to increase production to meet demand.

I also think the position is also different between older models and current models. I am sure Porsche have no plans to start making 997 GT 3RS again so there is nothing they can do to balance supply and demand for the older models. However there is much they could do with current models which is why I think they should have a rethink on GT car production

 

[lowndes]

This seems to me to be a RHD issue. Mobile.de has 16 991GT3 for sale from 140k euro ( about £105k).

 

[Motorhead]

ORIGINAL: bobfair

With the GT cars Porsche chose not to make many, wont let you order one and have no plans to increase production to meet demand.

Bob,

That may be the case with the GT3 RS [and the GT3?], but I understand that Porsche would increase production of the GT4 if they had the capacity. With a very few exceptions, Caymans are built at VW's Osnabruck factory alongside the Boxster and Golf Cabrio where [total?] production was 30,800 as at Dec 2013, so unless production can be ramped up there's very little chance of meeting the current UK demand blip.

Jeff

 

[flat6]

Hi Jeff

But we often hear about people buying a new car that is already spec'd and built and getting a healthy discount. If that is true, on Porsche's highly efficient production line which is churning out surplus cars in between ordered cars, can't they reallocate slot to GT4's from surplus cars that aren't customer requested. Maybe whilst they have said the GT4 is not limited production, they are artificially keeping the production figures low by claiming there is a production capacity limitation...

This is an interesting topic and I guess for me it's like Porsche is straddling between the high volume business model and the [low volume] exclusivity model. Will be interesting to see if they can continue to maintain their brand image across both. I decided never to buy a 'standard' (sorry I don't know what word to use!) Porsche again after I got seriously stung when I came to replace the Cayman S. It was a great car and I am a fan of the Porsche engineering, yet I didn't expect its value to be at an 'its unwanted' level, given what I had paid for it and the short time I had it. Selling the Spyder was a much better experience. I now have an older turbo, which I didn't concern myself about the depreciation on, because I wanted a gen1 turbo and have no plans to sell it. OK it isn't a limited production car and it takes a long time (maybe 20 years?) before a turbo's value strengthens (after many leggy, cheap examples exit the market and the remaining good examples like mine start to appreciate), but if I had spent the same money on a newer, 'standard' car it would lose a lot more, a lot quicker. I'd guess we have quite a high proportion of used car buyers in the Club, including myself. Yes there are new car buyers too, but perhaps not in proportion with Porsche's new car sales figures. It makes me wonder how many new Porsches are sold to 'Joe Bloggs' who change marque each time they replace their car (and may not return after their experience with high depreciation on 'standard' Porsche models) whilst many Porsche enthusiasts struggle to get into premium / specialist models like the GT3 and GT4 as they face a Ferrari-type exclusivity model and have to go buy something else or a used car.

It will be interesting to see if they can maintain the brand image on both sides. At the top end of premium, the 918 did not sell out as quickly as perhaps the La Ferrari did, so they have a little bit of work to do there. However in the <£200K bracket, Porsche is able to play the game very well with the GT3, GT3 RS etc. So maybe these cars, by limiting them, is to bolster the brand image in terms of exclusivity, whilst it takes a dent from moving into producing high volume executive vehicles which contribute to the reputation of mass production (I don't know how their residuals compare to the residuals of the sports cars as I haven't checked). (I must add, I have driven a diesel Panamera and was very impressed with it and it does have the DNA of a [modern] Porsche, so I am not knocking the Macan etc.)

It does seem that Porsche's brilliant engineering is strong enough to keep its core fan base happy enough to overlook some of the other things such as poor residuals and the GT4 buying experience that has left many enthusiasts disappointed. But how long can they maintain that balance... That is not to say that they can't...

 

[mnk303]

Very interesting thread, I owned the last GT3RS and it remains one the few cars I have ever owned (and that's been a lot) to sell at a profit. As much as I adored it I could not use it. However I only make one comment there is a fine balance Porsche needs to tread here, make too few GT cars and you risk upsetting the buyers who have been waiting on a list long before others (others being famous, elite). Make too many and you risk making the car devalued and not so special. I am not convinced the blance is right at the moment.

Reason

1) Close friend is very senior in Porsche HQ and he does not feel Porsche Worldwide has got the balance correct, even more so with the GT4 , this really was a balance which went the wrong way.

2) another friend was first on the waitng list of a particular branch and all GT4 allocation went to owners of 918 not to people on the waiting list.

I am NOT making a judgement as few will really know what Porsche Germany are thinking at board level, but if they are chasing a Ferrari attitude it's dangerous terrioty

Ps as had been said before Porsche is a SUV maker who happens to make sports cars. When it was independent it could be more aggressive in its marketing now it has to be part of a bigger picture.

 

[pauljmcnulty]

It does seem that Porsche's brilliant engineering is strong enough to keep its core fan base happy enough to overlook some of the other things such as poor residuals and the GT4 buying experience that has left many enthusiasts disappointed. But how long can they maintain that balance...

I'm loving reading this, but as someone who has a very limited world-view.

I don't understand the appeal of the harder versions of the road cars in the UK, nor do I get the need for a huge 4x4 designed for wide open roads. A basic Cayman is arguably all the Porsche you'd need: as the MX5 is re-visiting through less weight, a sharper experience etc.

What is Porsche's "core fan base"? The UK owners who moan on forums that they can't get enough GT-whatever cars, and then moan on the internet that their brake discs have serious corrosion from lack of use? [8|]

Seriously, Porsche's business model must be to sell Macans to the emerging markets, lending a halo-effect to the sister VW and Audi models that make up the millions of sales. Heritage and motorsport add to that halo-effect, so they will continue to sell low numbers of sports cars in order to boost the brand, but it's not their main focus any more, is it?

La Ferrari may make Ferrari a few million profit selling cars to collectors who'll never drive them, but red baseball caps and branded babygros will make them billions in China, Russia, South America.

 

[fbr]

The second hand value of cars, along with their exclusivity & investment potential appears to be a peculiarly British obsession. Porsche, as with any other mass producer, is primarily concerned with the first hand purchase of their product. It could be argued that a cheaper and more buoyant used car market gets your goods to a wider market and encourages the first time purchase of new products and the increased production of more OEM spare parts.

Here's an amusing international (Planet 9) view of Porsche's GT production philosophy:

Dateline Dec, 2015, Location Stuttgart

Head of Accounting: So how many GT4 cars have you produced?
Head of GT Production: We have delivered 1,122 cars worldwide
Head of Accounting: Sehr gut. And the total profit on all cars?
Head of GT Production: Uhmmm "¦. (-€12,423)
Head of Accounting: Was ist das!!! No profit?
Head of GT Production: The GT4 is a halo car. It's meant to drive up sales of all Caymans.
Head of Accounting: OK, we will wait to see the 2015 final Cayman sales.

Dateline March, 2016, Stuttgart (Porsche CEO, Head of Accounting, Head of Production)

Head of Accounting: Sir, how many more world wide Cayman sales have you made in 2015 vs 2014 and how many of those do you attribute to the GT4?
Head of Production: We have sold 470 cars less in 2015 than 2014.
Head of Accounting: But the Head of GT production assured me that the GT4 would generate profit indirectly!
PAG CEO: What am I going to tell the board?

Dateline April, 2016, VAG stockholders meeting

Chairman of VAG: Sir, overall, including total R&D costs, total direct profits, and indirect profits, how much money have we made on the GT4?
Chairman PAG: (-€2,356,423)
Chairman VAG and the stockholders: How is this possible? You make €20,705 per car. Do you need some more Z options for the GT4? Maybe offer some $6,000 PTS and LTS? Offer something in electronics other than a CD changer? What do you need to do?
Chairman PAG: According to P-9, there are 2,110 potential buyers who want to buy a GT4 but cannot get an allocation. I suggest we increase production to meet demand and increase the price by €10,705 so we break even. Then in the third year of production, we will introduce the first special editions, 2nd anniversary GT4 Black Editions version and charge an additional €5,000 per car. After all, it WILL have special black paint. But with all the options, only to be made available for the special GT4 Black Edition model, we will make an additional €7,000 profit per car.
Chairman VAG: Make it so, but for one more year only. Then come back and present your business case for production year 2017. I want to see your plans for the GT4 Black Edition model. My son will be graduating that year and I might want to see what z options you have available then and something better than the Burmeister. Have you looked into Carplay yet?

Dateline July, 2016, Stuttgart

Chairman PAG: I told you guys reading P9 would get us out of the dog house. Now stop making base Caymans and start building more GT4s
Head of Production: But sir, if we do that we will have disappointed buyers, "¦ nm "¦ bigger price, more profit
Head of GT Production: No worries. I got some z options to add along with a Burmeister, LED headlights, and those new fancy CL wheels. We will make a fortune on these cars. I'll get my guys working on the Black Edition model and see what we can do for a third year, special, one year only model that gains 0.3 seconds on the Ring because we will use helium in the tires.

Sorry it's a bit Cayman biased but that doesn't detract from the humor

Frank

 

[bobfair]

I don't understand the appeal of the harder versions of the road cars in the UK, nor do I get the need for a huge 4x4 designed for wide open roads.

I think it is great that our club can accommodate a wide range of interests from 356's right through to the current high tech cars.

Personally I don't understand the interest in the older cars. To me they are uncomfortable, noisy (in the wrong way), unreliable, inefficient, slow,need constant maintenance, use outdated technology and in many cases are vastly overpriced. However I am delighted to see others in the club maintaining and using them but they are not for me. I completely understand others feel differently. They probably think I am crazy buying new cars. One thing we all share is a passion for the brand Porsche and hopefully my new cars will be someones old car in 25 years time.

The appeal of the GT cars to me is the driving experience they offer and the ability to use them on track days. Every time I get out of my GT 3 I have a smile on my face. The so called standard cars just dont do that for me. As they grow their "standard car" business Porsche do have difficult decisions to make if they want to retain a sporty image and the premium pricing they can command. The role of the high profile GT cars is very much part of that mix which is why I started the thread to see how others feel about it as in my view Porsche have got the production levels wrong at present. I should not have to buy a 918 in order to be able to buy a Cayman GT 4 but I suspect the humorous post above is very close to the truth

 

[fbr]

ORIGINAL: bobfair

..I think it is great that our club can accommodate a wide range of interests from 356's right through to the current high tech cars.

Personally I don't understand the interest in the older cars. To me they are uncomfortable, noisy (in the wrong way), unreliable, inefficient, slow,need constant maintenance, use outdated technology and in many cases are vastly overpriced. However I am delighted to see others in the club maintaining and using them but they are not for me. I completely understand others feel differently. They probably think I am crazy buying new cars. One thing we all share is a passion for the brand Porsche and hopefully my new cars will be someones old car in 25 years time...

Couldn't agree more.

Frank

 

[Motorhead]

ORIGINAL: flat6

Hi Jeff

But we often hear about people buying a new car that is already spec'd and built and getting a healthy discount. If that is true, on Porsche's highly efficient production line which is churning out surplus cars in between ordered cars, can't they reallocate slot to GT4's from surplus cars that aren't customer requested. Maybe whilst they have said the GT4 is not limited production, they are artificially keeping the production figures low by claiming there is a production capacity limitation...

An interesting point 6. Other than cancelled orders, I'd like to know how many surplus sportscars Porsche are actually churning out. Obviously there are the PC demonstrators and press cars as well as specials for the so-called premier customers, but are they really just running cars down the line to make up the numbers?.

Assuming that there's no extra capacity at Osnabruck, and if, say, demand for 991s is slowing then I suppose it's feasible that some GT4s could be built in Stuttgart provided there's sufficient production flexiblity to achieve that.

As Martin's Porsche source has commented, it sounds as though Porsche underestimated significantly initial demand for the GT4, but it will be interesing to see if this is just short term or if there is sustained interest over a number of years.

Jeff