Is it time for Porsche to rethink GT car production ?

[BigCat]

I personally doubt if Porsche are manufacturing surplus cars, the exercise would lead to unsold inventory which no manufacturer wants.
I'm visiting the Leipzig and Stuttgart factories in April so I will ask the question and see what I get told.
What is more likely is that OPCs may decide at varying times of the year based on their sales forecasts to preorder cars in order to make use of their allocations.

 

[ralphmusic]

Forecasting assumes you know your customers which is unlikely to be true for PGB, that the OPCs have product info which clearly they don't, and as we all know in business forecasts are always wrong.

There are now at least 3 of us on April's factory tour to quiz them..

 

[BigCat]

Not sure about your OPC but the one I deal with know their products.
As for forecast accuracy, I spent 30 years selling high capital cost communications and test systems to various industry segments,accurate forecasting was critical to the business success and I and most of my colleagues had no issue with accurate forecasts as it was part of how we were measured and hence paid.
If you know and understand your customer base forecasting accuracy is not an issue, and maybe not all the dealers are going to have the skills to do that but it's not difficult and the dealer principal of the OPC I deal with certainly knows his market and customers.

 

[okellyt]

Its curious isn't it - I couldn't get a slot for a Turbo S for 3 month and when got one I was told it was Jardine groups only hard top s allocation for the back end of 2014

In order to make the cars we want to drive, Porsche need to sell lots of Macans, Cayenes and Panamera's to the Essex/Cheshire set and middle and far east - the more they sell the more money they have to indulge us in some great cars. And some how these other vehicles have something of the sport scar Porsche-ness about them, they are not jut also-rans but very good cars/suvs with a bit of Porsche DNA in them.

We can whinge about not enough of our sports cars to go around but the fact is they make a lot of the stock models that are very good and fewer of the "special ones", I doubt they'd be so prized if they were freely available.

t would be better if they targeted these models at regular Porsche buyers who drive their cars but the Ferrari model (Rich people who can afford many cars at the same time) is very appealing to a business - after all Porsche is a business and in t to make a profit as well as maintain its brand.

 

[flat6]

ORIGINAL: 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

Hi Jeff

As an example, PC Swindon have 4 demo BOXSTERS on the used car locator at the moment, all 2.7s. Do they really need 4 demo cars of the same model and engine? Likewise, PC Hatfield have 3 demo BOXSTER 2.7s and one 3.4. PC Bristol has 5 demo Cayman 2.7s and 1 demo Cayman S. Hatfield 4 demo Cayman 2.7s and no Cayman S. PC West London 3 demo Cayman 2.7s.

My guess is they don't need so many demo vehicles at one dealership of the same type, so I don't believe they were all ordered in as demo vehicles, but this is how they label them on the used car locator. Where are these cars coming from; why do these piles of cars exist.

I also guess that if you have one of these cars and offer it to one of these dealerships as a trade-in, they're not going to 'want' it given they have so many already to shift.

The reason I think they make surplus cars is because every mass producer has sophisticated production lines that are not easy to shut down or even slow down. I may be wrong.

EDITED

 

[flat6]

ORIGINAL: 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.

Frank

I agree that the new car sales is a manufacturer's first priority. However, there is a cross-over point where they also have to manage the perceived product value too.

We all know that Porsche has a healthy profit margin per car and with the 911 costing roughly the same as a Boxster to manufacture, a very healthy profit in those. But none of that matters, what matters is the perceived value of the product by the customer, and they have no problems there right now. But, with a 991 Carrera nudging £100K if you select the most costly options, if the depreciation is steeper than the customer would expect for a premium brand, it does affect their perception of what they paid in the first place. Then you get such buyers opting for nearly new cars next time "with a huge saving off list" being the cliché i.e. they no longer perceive that the new car is 'worth it'. That does affect new car sales. I know of a loyal Porsche customer who buys a new car every few years, however, the depreciation on his current car is so steep that the gap he needs to bridge to upgrade to a new one has become unpalatable and he is sticking with his current car for longer. He's still a very happy Porsche owner, but that matters less to Porsche than the new car purchase they are losing as a consequence.

So, yes, I think a point comes when residuals matters to the supplier also. If your brand sinks to a level where customers do not feel the product is worth it (in the case of cars, when the dealer's offer for your current car is so derisory that you start to feel a fool for buying it at list price in the first place), then your brand is in danger of getting to the equivalent of 'junk status'. Yes all cars depreciate, but premium brands are more conscious of it. I'm an not saying Porsche is near this point. However, how many people are buying nearly new cars instead of new cars these days, and why are they choosing to do so...

 

[fbr]

Cecil

Understanding individual or collective perceived values is not my area of expertise but for the benefit of the discussion I'm happy to give it a go.

What I think you are saying is that in order to protect Porsche's premium status and minimise depreciation, their new car prices should be lower and nearly-new car prices higher.

This allows your loyal, and even happier, cash strapped Porsche customer to regularly buy a new car, shows a clear commitment by Porsche to maintain the residual values of nearly-new cars and, as a bonus, gives rise to a more reasonable perception of their re-balanced profit margins.

The corollary to your argument is to allow not so nearly-new cars to become overnight classics and command astronomical prices. Whilst this neatly avoids the embarrassment of junk status it tends to create a new class of foolish owner who regret selling the original car at a reasonable price. Porsche could go some way to mitigating their dissatisfaction by continuing to produce and sell new cars at a price considerably lower than their immediate second hand value.

Sorry to the OP by distracting from your original topic.

Frank

 

[flat6]

Hi Frank

No, nothing quite so complex. Simple supply and demand. The topic is why have Porsche produced so few GT3 and it widened from there. In response to your opinion that manufacturers don't need to care about depreciation, I gave my view that I think they do. The year before last, my local OPC dealer principle said pretty much the same thing at our annual club night hosted at the showroom. It wasn't a question from the audience but one of the slides he had prepared which had the figure by which Porsche was going to reduce the number of cars brought into the UK, to bolster residuals. I can't say I have noticed an affect of the reduction as I don't buy new cars, but maybe that is why we hear about long wait times on certain models as Porsche is trying to redress the balance of supply and demand.

 

[fbr]

ORIGINAL: flat6

No, nothing quite so complex. Simple supply and demand.

Cecil

A bit like the housing market ?

Frank

 

[bobfair]

Porsche was going to reduce the number of cars brought into the UK, to bolster residuals.

Over the last 15 years I have heard my OPC say this many times. Porsche do restrict supply when necessary to balance supply with demand BUT I have never seen them boost the supply of GT cars when demand is very strong hence my original question. In my view Porsche cannot impact the market for cars they no longer make but they do have a big say in what happens to the value of current models.

 

[flat6]

ORIGINAL: fbr

ORIGINAL: flat6

No, nothing quite so complex. Simple supply and demand.

Cecil

A bit like the housing market ?

Frank

I don't know about that but in my opinion, what he was saying indirectly is that in order to maintain the brand value i.e. what they charge for new cars is in part bolstered by the value of the car when it becomes a used car. If residuals fall too low, it effects the value of the brand. In relation to the OP's point, the GT3's are selling for tens of thousands over list on the used market. That helps Porsche to be in a position to charge even more for the next iteration of the GT3 as the market is definitely up for it. Likewise Ferrari. Limited supply bolsters what they want to charge for their cars. They don't even need to manage residuals. But because Porsche is moving more and more into mass production, whilst also trying to maintain a premium brand up there with Ferrari, whilst trying to sell cars into volume sectors like BMW it does feel it needs to manage residual. Supply and demand is often managed artificially, as with the GT3. The managed it artificially with the 918 and yet it took a long time to sell them, so it's not necessarily an exact science but they would rather people be queuing up climbing over each other to buy their products without even a test drive, rather than piling them up at dealerships offering special deals to shift them.

 

[flat6]

ORIGINAL: bobfair

Porsche was going to reduce the number of cars brought into the UK, to bolster residuals.

Over the last 15 years I have heard my OPC say this many times. Porsche do restrict supply when necessary to balance supply with demand BUT I have never seen them boost the supply of GT cars when demand is very strong hence my original question. In my view Porsche cannot impact the market for cars they no longer make but they do have a big say in what happens to the value of current models.

I think Porsche's internal conflict is that they are restricting cars like the GT3 too much, as you say, whilst they have the other mass production models for which they obviously can't do the same, otherwise they wouldn't be mass produced. I think they'll restrict the GT3, GT3 RS, GT2, GT2 RS, 918 and GT4 heavily, to the good of the brand, because they can't do so on the ever growing plethora of other mass production models. When they start making vans like Mercedes, it will get even worse []

I'm gonna bow out now as I don't want to stray too far off topic.

 

[flat6]

P.S. I guess my point is that you may not be able to look in isolation at what they do with the GT3 supply, because it may be part of a wider business strategy that encompasses the whole portfolio.

'Over and out' []