Service charges are now stupid.
- Thread starter MrDemon
- Start date
I suspect service and other charges will continue to increase significantly, why?
The market's overall appetite for high cost highly taxed new cars will decline and whilst today's market issues may be rather dramatic, the general downward trend in demand for these will continue
Like the computer industry in the mid-1980's when IBM introduced a product halving the price for equivalent performance, the whole industry including Honeywell where I was the CFO started unbundling services and software which then became the main sources of profit. Porsche and other prestige OEMs will similarly maximise their post-sale income streams, leveraging their warranty terms on increasingly complex products that require significant technical resources to maintain
In another life we took IBM to court for their refusal to provide third-party maintenance companies with critical technical data that we required to maintain high service level (e.g. BAA) computer equipment. They bailed and we got access. I wonder whether a similar an approach would work for indy servicing during and post manufacturer's warranty?
Other issues for dealer profitability are:
Porsche financing costs at (11% pa) which are out of market compared with say Mercedes at 4% and although third party financing may be better, there is no manufacturer support for financing in or out of Porsche network
The Porsche dealer network Centres are on an expensive rebranding programme to become "experience centres" requiring investments in facilities and customer facing staff
Porsche EV products are heavily discounted as new and the weak secondary market for these does not encourage buyers. Also there are many more buyers who don't see the historic value in the brand than those who appreciate it and there are lots of choices
Times are changing and Porsche family's appetite for dividends coupled with excess capacity woes in Germany will continue to press on Porsche customers and one either bails or gets on driving what we can afford and just maybe, Porsche will have to adjust their business model.
The market's overall appetite for high cost highly taxed new cars will decline and whilst today's market issues may be rather dramatic, the general downward trend in demand for these will continue
Like the computer industry in the mid-1980's when IBM introduced a product halving the price for equivalent performance, the whole industry including Honeywell where I was the CFO started unbundling services and software which then became the main sources of profit. Porsche and other prestige OEMs will similarly maximise their post-sale income streams, leveraging their warranty terms on increasingly complex products that require significant technical resources to maintain
In another life we took IBM to court for their refusal to provide third-party maintenance companies with critical technical data that we required to maintain high service level (e.g. BAA) computer equipment. They bailed and we got access. I wonder whether a similar an approach would work for indy servicing during and post manufacturer's warranty?
Other issues for dealer profitability are:
Porsche financing costs at (11% pa) which are out of market compared with say Mercedes at 4% and although third party financing may be better, there is no manufacturer support for financing in or out of Porsche network
The Porsche dealer network Centres are on an expensive rebranding programme to become "experience centres" requiring investments in facilities and customer facing staff
Porsche EV products are heavily discounted as new and the weak secondary market for these does not encourage buyers. Also there are many more buyers who don't see the historic value in the brand than those who appreciate it and there are lots of choices
Times are changing and Porsche family's appetite for dividends coupled with excess capacity woes in Germany will continue to press on Porsche customers and one either bails or gets on driving what we can afford and just maybe, Porsche will have to adjust their business model.
Yes, Porsche do appear to take a large profit per unit, but we should remember that the number of units sold by mainstream manufacturers is a great deal higher than the Porsche numbers. For those that are interested, it would seem that Porsche was ranked number 2 on profit per unit in 2023 (see table below). I am actually surprised by the number of volume manufacturers making 11% plus in that list. If Porsche are now number 3, it would be interesting to know which of the 2023 'also-rans' made a stellar leap to overtake them in 2024.
I was also able to find unit sales for some of the larger brands and have shown these alongside the ranked unit profit figures. I am not surprised that low volume manufacturers like Porsche and Ferrari take large unit profits. Part of this will be invested in future product development and marketing for models/technology that will not begin paying their way for several years. The development costs for a low volume premium brand to create a high specification new model with leading edge tech and innovation will be just as high as for one a brand with many times the sales volumes.
Yes, owners and shareholders will take their cut too, that is the way of the world we live in. We can't change this. Investors, directors, managers, and ordinary workers too, are always looking for the best return on their money or time at work.
Given the end product that Porsche delivers, compared to the mainstream, and the growth in Porsche sales figures, buyers must consider the product to be worth the premium price. As MrDemon says in his signature line, 'Life is too short to buy dull cars.'
More info on global 2023 car sales can be found here: https://fiatgroupworld.com/2024/04/07/ferrari-makes-even-more-money-in-2023/. This includes some commentary on the top ranking brands, including Porsche.
Brand | Profit %/Unit | Profit Rank | Unit Sales (Millions) | Unit Rank |
Ferrari | 27.0 | 1 | | |
Porsche | 19.0 | 2 | 0.3 | |
BMW Group | 11.9 | 3 | 2.1 | 12 |
Stellantis | 11.8 | 4 | | |
Kia | 11.6 | 5 | 2.7 | 8 |
Mercedes-Benz Group | 11.4 | 6 | 2.7 | 11 |
Toyota | 11.1 | 7 | 8.6 | 1 |
JLR | 11.0 | 8 | | |
Subaru | 9.5 | 9 | | |
Hyundai | 9.3 | 10 | 3.5 | 5 |
Tesla | 9.2 | 11 | 1.8 | 13 |
Isuzu | 9.1 | 12 | | |
Suzuki | 8.5 | 13 | 2.9 | 7 |
Mitsubishi | 7.2 | 14 | | |
Volkswagen Group | 7.0 | 15 | 6.7 | 2 |
BYD | 6.3 | 16 | 2.7 | 10 |
Honda | 5.8 | 17 | 3.8 | 3 |
General Motors | 5.4 | 18 | 2.7 | 9 |
Volvo | 5.0 | 19 | | |
Mazda | 5.0 | 20 | | |
Renault | 4.7 | 21 | 1.4 | 14 |
Nissan | 4.6 | 22 | 3.0 | 6 |
Ford | 3.1 | 23 | 3.7 | 4 |
GWM | 1.6 | 24 | | |
I'm really shocked how Porsche (aka VW) Financial Services are still offering an APR of over 11% when the mother ship is offering it at 6.9% on a Golf R for example. They really aren't selling their product as, as Ralph alluded to, there are brokers and other finance companies, offering finance rates much lower.
Just had a quote to have my wife's Skoda Citigo, 21K miles, 66 reg service, due in 3 weeks time.
Oil change, filter, engine and cabin filters and a brake fluid change.
£478
About £200 more than I expected. Obviously very snazzy cars these Citigo's....
Oil change, filter, engine and cabin filters and a brake fluid change.
£478
About £200 more than I expected. Obviously very snazzy cars these Citigo's....
Main Skoda Dealer in the West Midlands.
It is thought to take around 1.5 hours to do the service and brake fluid.
2 years ago I paid £80 at a good local garage just to do the fluid change.
It is thought to take around 1.5 hours to do the service and brake fluid.
2 years ago I paid £80 at a good local garage just to do the fluid change.
Dealer said service was 20k or 2 years. Also said if it was his own he would change the oil after 1800 miles (running in). JZM (indy) charged £270.
Just to tidy-up the Skoda service quote from the main Dealer, the local large 'all-rounder' garage who serviced it last year has just quoted £250 inc the fluid change.
So, that is where it will be going.
I think the 1:2 ratio is on parr with the OPC/Indie Porsche balance.
So, that is where it will be going.
I think the 1:2 ratio is on parr with the OPC/Indie Porsche balance.
Posts made and opinions expressed are those of the individual forum members
Use of the Forum is subject to the Terms and Conditions
