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Yesterday’s discussion of Porsche’s identity as a pure sports car company (compared to an SUV-peddling luxury brand) was predictably emotional, so here’s the cold, hard truth. The Cayenne has been Porsche’s best seller in the US since its introduction, excepting a 911-happy 2006. Oh, and this year it’s on track to come in second… to the Panamera. Meanwhile, Porsche’s Boxster/Cayman duo has been dropping off since before the most recent recession even began, and 911 sales are approaching a 15-year low. Now that we know the facts, is there any debate about what would happen to Porsche if it stuck to its sports car knitting?
38 Comments on “Chart Of The Day: Porsche Sales By Model 1995-2010 (YTD)...”
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At first glance, I’d say we need to take steps to reduce the Panamera, but there’s still no proof that it’s caused by man…so let’s just sit and watch.
I suspect what you’re seeing here is that the kind of people who buy new Porsches started seeing economic problems (or hints thereof) well before the rest of the world. I suspect you’d see something similar across most luxury nameplates in the >$60K space.
I know a guy who, right in that time frame, dropped plans to shop among Aston Martin, Maserati, and the like, and opted to stick with the boring Lexus 4-door he’d inherited. Named the performance of the stock market as the reason.
Wierd…as soon as Nissans GT-R came out Porsches sports car sales fell off the map.
Are you attempting to imply causality? If so, you may want to investigate a concept called “post hoc reasoning”.
Living in Silicon Valley, I’ve seen remarkably few GT-Rs on the road. Maybe half a dozen since it was released.
Yeah, but you wouldn’t know if you saw a new Porsche on the road, would you?
Porsche has had other bad years without competition from the world’s bestest supercomputer on wheels. Is there any significant cross shopping between 911s and the GT-R?
The hills and valleys look to correspond to new models and refreshes. The Cayboxsters are long of tooth, the Cayenne the same and the 911 has been long of tooth for decades. Morgan has shown you can sell a newly made antique for half a century and more, but you can’t sell many.
They’ll be lucky if they can make one line of uncompromised cars. Only the GT3 and GT2 meet that description now.
Well, I’ve seen far more Panameras than GTRs. They’re already becoming almost commonplace. Aside from that, no, I don’t pay close enough attention to 911s to sort the brand new from the few years old.
But if there’s a location which would be assumed to be a target-rich enviroment for the GT-R, I’d be hard pressed to come up with a better one than Silicon Valley. And I’m just not seeing GT-Rs. I’ve seen more Teslas (counting only ones far enough from the showroom to dismiss the possibility of the sighting being a test drive).
Guys, I’m pretty sure this was a joke…
At least I hope so. Anecdotally, I see 15+ Porsches every day (2-3 of them 911s), but I’ve seen two GT-Rs in my life. Ever. Anywhere. I highly doubt any rational person would assume Mercennarius was being serious.
Just a little Nurburgring teasing, IMO.
It was a joke.
Many luxury brands have gone the mass-tique route in the search for volume or simply survival.
Think of the premium liquor brands that changed their long-held marketing campaigns from genteel Old Money to crass hip hop and slacker demographics.
Ah, yes, I do remember the great liquor campaigns of the 1990s to court that vital slacker demographic. Who can forget the Johnny Walker “Whatever…” campaign of ’94, or the short-lived bottle of Chivas Regal with the flannel-patterned label? Couldn’t go to Lollapalooza without having somebody offer you a free sample of J&B I tells ya
in other words: hip hop, yes, slacker, no.
Yes to hip hop, although I do believe Hennessey and Remy Martin and the like were aimed towards a certain urban demographic well before the invention of hip hop, and I’d call their current campaigns anything but crass. More like a cool, handsome guy in a silk shirt sipping hooch next to some hot babes. So in short, just like those ads from Playboy in the 60’s but with a certain modern twist. But I digress, this isn’t the Truth About Liquor Ads, after all.
[ some old joke about Porsches and porcupines.]
Personally, I’d place the Panamera on the ‘true Porsche’ side of the ledger, or at least as true as most Box/Cay/911 variants. Amongst cars capable of hauling 4, it’s entirely unique, much less compromised as a high speed backroad hauler than even the sportiest S, 7 or A8. Even the M5 is rather clumsy by comparison.
As far as the obviously volume selling Cayenne, does it really contribute all that much to keeping the other lines alive? It sure looks to have generated profits for P shareholders, or at least cash for management to play Investment Bankers with, but to what extent are those profits benefiting the sportier cars? Aside from the immediate launch years, Cayenne sales looks rather tightly correlated with P “sports car” sales. So it’s not like the Cayenne looks to be saving the day when sales of the others are failing. Heck, if break even volumes on the Cayenne are higher (not entirely impossible, considering it’s facing more immediate competition), it may in fact be a net drag on the sports cars in exactly those years when the sports cars can least afford it. The 911 certainly seems like it would be profitable in fairly low volumes, given what looks to be at least a $20,000 markup based on long ago amortized ‘heritage’ alone.
Of course, P may get the Cayenne’s chassis so cheaply from VW it is in fact more profitable in low volumes than the sports cars. What do I know. But the kind of reasoning that simply looks at sales volume per product line to determine which products are “keeping the others alive”, would imply every company would need, or at least benefit from, mass market lines to go along with their high end offerings. Which seems just a wee bit myopic.
Seeing what Ford did with the Raptor, and what outfits like Total Chaos are able to do with Toyota trucks and SUVs, if P wanted to do an SUV, that’s what they should have aimed for. Independent long travel suspensions front and back, dirt/offroad tuned traction/stability/rollover/jump-air-landing-stability controls etc., etc. Wantonly destroying your brand equity and uniqueness (and perhaps even more important, becoming dependent on groups of customers and employees with little to no overlap with those buying your supposedly ‘main’ lines) for a short term boost in sales to Paris Hilton wannabe’s with poorly underwritten home equity lines, just doesn’t strike me as much of a long term survive and prosper proposition. No matter how big those equity lines, and how sloppy the underwriting, happened to get in the short term.
I think the question is whether or not Porsche could have sold more sports cars if they’d made more sports cars. They used to have three distinct sports car(or GT) models, and they covered a broad range of characteristics and prices. Now they have two basic sports cars spun off of one set of common components. On top of that, the Boxsters had profound mechanical failures in their early model years, diminishing the prospects of repeat customers. Had the resources that went into SUVs and…whatever that eyesore is…gone into developing new sports cars, would sales have been better or worse? I don’t know. I do know that ultimately Porsche is trading on their brand equity now. Brand equity is a consumable. When it is gone, they’ll have nothing.
The Cayenne will ultimately be seen as Porsche’s Hummer: great for a short term sales bump but ultimately damaging to the brand. Stuki is correct. There is little overlap between Cayenne buyers and other Porsche buyers so they’re not building valuable brand loyalty.
So let me play Porsche CEO for moment. Porsche is a sports car company, not a luxury car company. There’s a big difference. So what’s missing? An entry level sports car priced below the Boxster/Cayman to get young men hooked on the brand. Porsche needs to cultivate the 911 buyers of the future. Jack Baruth might hunt me down and kill me for saying so, but my suggestion is to bring back the original poor man’s Porsche: the 914. Price it to compete against the MX-5. I actually have soft spot for the original 914 styling and no one under 35 is going to remember that they were lousy cars, never mind lousy Porsches.
It’s a good old fashioned “good/better/best” product assortment:
Good – 914
Better – Boxster/Cayman
Best – 911
And stop making a million different 911 variations. I just went to the Porsche website. There are 20 different 911’s! Who can keep track of that many sub-models?
Each model line by revenue, vs. time, would be a more fair comparison in terms of survivability. In terms of brand image, there are more Porsches out there.
The best entry-level Porsche to me is a used mid-’80s 911 Carrera. $15-$20k for a nice one without the huge immediate depreciation of a new one… though to be fair they likely won’t hold much appeal to drivers under the age of 35 who remember them when they were new. No power steering, no cup holders, rough ride, noisy engine (or musical, depending on your point of view).
Or, to be fair, given that most of us including car enthusiasts, can barely tell 911s from the past 10 years apart from one another, a six year old 911 with low miles is probably a more appealing choice and, in tough times, a more affordable option for status-concious investment bankers who don’t want to be too flashy with their money.
The 911 has much the same problem as Harley Davidson does: It’s core market (aging white guys with excess cash and the desire to pretend that are still young studs) is getting a year older every year.
The Cayenne, on the other hand, is bought and driven by a younger demographics, and from what I have seen, many Cayenne drivers are women. Female 911 buyers, on the other hand, are a rare bird.
Any company which wants to be in business for the long haul must: A) appeal to women and B) appeal to people under 30.
But every year, scores of people turn 30, 31, and so on and move into the older demographic.
So the supply of old people has a never ending source (young people getting older).
“But every year, scores of people turn 30, 31, and so on and move into the older demographic.
So the supply of old people has a never ending source (young people getting older).”
True, but the baby boomer hump is passing, so there are fewer replacements. Eventually it will stabilize at a lower equilibrium.
The US population is predicted to increase for quite some time unlike a lot of other first world economies.
A large portion of that will be old but that is due to increasing life spans.
my 60 year old mom drives a 911 (with manual), and gets comments about it all the time. people actually refer to her white convertible as “a man’s car.”
I see all of Porsche’s models every day, and no I can’t differentiate from many of the 911s. What is patently obvious (and painfully to some) is that Panamera has to be a sales hit, at least in terms of Porsche volumes. Is that so bad? I agree that the peppermobile is not really a true Porsche, but what is really wrong with a 4 door Porsche?
Nothing wrong with a 4-door Porsche, but why do they have to be so ugly?
Seems to me that Porsche was braver back in the 80s, when it tried out ideas like the 928 and 944.
I noticed a Porsche ad on scienceblogs for the Panamera.
It says “Converts Non-Believers, Four at a time.”
Americans aren’t buying sports cars. And even as a sports car owner and fan, I can see why. There’s almost nowhere to drive them safely at this point. The roads are too trafficked and the sports cars are too fast. The track is the only good place to use them, and most people don’t have the money or the interest.
And while I am not a fan of the vehicle, I disagree that the Cayenne has, or will, hurt the brand. Plenty of rich folks want an SUV and a 911, and those are the buyers that has kept Porsche profitable all these years.
I live in Pacific Beach and ride my bicycle through one of the nicest parts of La Jolla every day. Porsches are thick on the ground here, from 356s to 912s to 997s. I even see the occasional 944 that is still street registered. What I have never seen is a Cayenne and a sports car sharing a driveway or garage. I go to a few track days with PCA people too, and I don’t see any Cayennes in the paddock or on the track.
I don’t see any Panameras sharing real estate with sports cars either. They’re fairly common around here, driven by the women who shop. And eat.
To answer the rhethorical question that Edward posted in the end: nothing would’ve changed, except WV would’ve bought them sooner by a year or two.
Really it is just the weak brats (public school/TV watcher) who complain about Porsche lineup and who will never have the earning ability to afford one (They could become taxtaker parasites in “government jobs” to afford one). It is about time they came up with a Porsche sedan and the Panamera is just striking! I would like them to get into the pickup truck market…A Porsche pickup truck! For the strong thinking man gentleman farmer…The Range Rover appeals to these people so why not a Porsche pickup?
It is true that the demographics are slowly changing and that there are going to be fewer and fewer people in the younger age group (and correspondingly more in the older ones). The short term effect is certainly that that means more people being able to afford a Porsche, in the longer term the future is less clear.
There is no definite evidence pointing towards brands underlying an ageing or a cohort effect when it comes to cars. Were it an ageing effect, people would simply change the cars and preferences as they transitioned between life stages, which will happen with vehicle types to some extent (differing needs) but not necessarily brands.
The cohort effect would be people forming an opinion / association with the brand at a certain stage in their life and changing it but little going forward (it tends to be much more stable if they have no actual first hand experience). If this is the way car brands operate then the Cayenne might actually be positive in a way – while we like to pretend otherwise, the car enthusiast market is fairly small and not that consequential, whereas the market the Cayenne appeals to is certainly more mainstream. It could very well be that the customers for traditional Porsches are simply slowly dying out or that their number is diminishing to regions, where it will be more and more difficult to serve them effectively.
In any case, both Porsche and BMW seem to be making a bet away from a pure driving pleasure / performance focus, which is not saying that the bet is correct but it seems to be the current direction.
I bought a new 911 when I turned 40 (which I still own) and a new Panamera 4S now that I am about to turn 50. I also own a new Audi S4, a Supercharged Range Rover, and two other cars. I just sold a V10 M-5 and owned a 540 and a 745 for many years. I love cars. Several points: car companies are not immune from changing markets and need to constantly update and refine their wares. All of this BS I read above whining about the Cayenne and the Panamera reminds me of when the 911 went water-cooled. If it had not, today the same people who whined about the 996’s radiators would be whining about the underpowered 997. Now, onto the Panamera: it is fabulous. It outhandles, outshifts, and is only a hair slower than the M5. It also gets about 65% better gas mileage.
People’s need change and it is great that Porsche is smart enough and dynamic enough to expand their lineup accordingly.
PS I am an investment banker and always chuckle at the jealousy and naivetee people exhibit about my industry, including many of the posts above.
Have you ever considered that people are not jealous, but actually view your industry as a parasitic drain on society? Perhaps there is legitimate frustration that comes from watching your industry pay politicians to reduce taxes and regulation of its members, then become vastly wealthy while the people who actually do and build things in this society are treated as serfs in your investment schemes.
Oh, and misspelling naiveté is probably not the best way to place yourself above the folks you refer to. I wish I could chuckle at your naiveté as well, but it has proved dangerous to simply laugh at what your industry is doing to our society.
Imag,
Excellent point re “naivete”. Apologies. The rest of your response is so filled with anger and half-truths that I fear any attempt I make to educate you will waste my time. To be clear, my industry has made some terrible mistakes and is deserving of some scorn, but labeling everything and everyone in it with a broad brush is simply incorrect.
Next time you drive on a road, use an iPhone, take a airplane ride, or pop some Lipitor thank an investment banker for raising the capital necessary for those products and services to exist.
If you would like to have a civil discussion please indicate so and I will respond. My bet is you won’t. I dare you to prove me wrong.
Sincerely,
JLOSF
@JLOSF: Apologies. I wrote a really decent response yesterday, but the posting engine ate it and I had to go to a meeting.
The gist is that I am not angry; I simply took issue with you pinning people’s dislike of your profession on jealousy. There are many legitimate reasons to have a problem with your industry other than simply wishing we were in your shoes.
I well know the investment banker line that nothing could get done without you folks. The line goes that everything requires investment, and you are the ones who are responsible for carefully doling it out. The thing is, the people I worked with who told me that line were investment bankers, and they also had a little saying from their Goldman days: “we invest your money until you don’t have any any more”.
Snark aside, the real point is that people invested in ventures long before the explosion of investment bankers, and they did it without being subjected to the exorbitant rents you all levy on the populace. Do you think we are incapable of investing without your industry to charge us 10% to “help” us? I know investment bankers who sneer at a 10% return.
There are a number of issues here. Some of them are basic aggregation issues. If I’m investing an inordinate amount of money, I am willing to pay someone a nick in order to get it well invested. I’ll pay a little more if they can get me an extra return. The return justifies the fees. This is the same line of thinking that leads shareholders to okay $50 million salaries for CEOs; the CEO is making billion dollar decisions, so it makes sense to pay a few million more for someone who is even marginally better than someone else. This is modern capitalism, where money values itself, and where aggregation puts a few people in charge of large amounts of money, lending their job the appearance of having very high “value”.
There are a few problems. One is that the investment banker doesn’t actually provide any real value. They don’t make the investments better – the money does that. The banker just enacts rent on the money for relocating it. The more they relocate money, the more they make. They are incentivized to just keep moving money around, because they make money the more they move.
Also, they make money on gains without losing money on the drops. That’s like playing with other people’s money at the craps table, where you get a piece of the wins but don’t share in the losses. Your strategy at that point becomes obvious and has tragic results for the original owners of the money.
Another problem is that, in order to grow their business, investment bankers can do only two things: raise the rent they extract, or increase the amount of money they extract rent on. This leads to an ever-increasing amount of money the rest of us pay to your industry to do what we always did before. That’s where my comment about parasitic behavior comes from. Your industry has learned to take an increasing amount of money from every other industry. I don’t see the value that we’re getting back.
The last problem I have time to mention is the sociological problem. Societies with massive divides between rich and poor are unhealthy. They do not provide equal representation, equal access to innate constitutional rights, or a number of other things we claim to value in our US of A. Investment bankers are not any more learned or any more intelligent than doctors, lawyers, or more than a few electricians I’ve worked with recently. They just happen to be in the position of moving everyone else’s money around. For that, they get massive amounts more money than anyone else. It’s an unhealthy and parasitic system.
When the Dutch economy in the middle ages became overburdened with finance and investment folks as a percentage of the total economy, it collapsed. That’s because, while playing money games can appear to have tremendous value, it doesn’t actually do anything. It doesn’t actually make drugs or feed people or contribute to welfare. And the secret no one wants to talk about is this: the best investment is one that generates money while spending none. According to your industry, printing money would be the best business in the world. Costs are next to nothing. Profits are immense. The losses (in terms of inflation) are shared with a tremendous commons. Printing money happens to be illegal because it’s recognized to be against the public good. What investment bankers are looking for, though, is an investment that is as close as possible to printing money without actually being illegal.
The drugs, the goods, the services – those are all a by-product of your investments. Your industry could really care less if they happen – as long as the money they generate comes in. The goods are only important when they bring cash. The more cash returned for the less spent, the better the good. Remember that when you’re out taking credit for all these great things your industry enables.
So I’m not angry, and I’m happy to hear your thoughts and corrections. I realize we are now buried under the blog-pile, so I’m also happy to let it come up on a future thread…
Cheers,
C
C,
Thanks for your note. I agree with many things you wrote, and disagree with some as well.
I will respond back in greater detail in the next day or three.
Sincerely,
JLOSF
C,
First, lets delineate between investment bankers and brokers. Investment bankers take companies public, do M&A, advise on divestitures, etc. Their business is transactional. Their fees range from a fraction of a percent on a huge M&A deal to 7% on a small IPO. The fees on the recent GM IPO was really small, perhaps 1.5%. No investment banker charges 10%, ever.
Brokers advise people on investments and charge commissions (often cents per share) or fees (.12 – 1.75% 0f assets). Yes, smaller accounts get charged more because they require as much work, and sometimes more, than large accounts. A fee dissuades brokers from excessive trading and better aligns his/her interests with the client”s.
Please understand clients are the scarce resource in my business, so overcharging them turns them into ex-clients. Self-defeating, no?
Again, no broker charges clients anything close to 10%.
Perhaps you are thinking of hedge fund managers. They typically charge 1% of assets and 20%of profits, often with a hurdle rate and always with a “high water” mark. The hurdle rate is typically a short-term bond rate. For example, say investors could get 1% in short-term bonds and a hedge fund manager returns 12% in a year. His 1% fee comes off the top, the investor gets the net 1% (the hurdle rate), the other 10% is split 80/20. The investor ends up with 9%, the hedge fund manager 3%.
I am fully aware of the litany of hedge fund manager morons out there: Madoff (not even a true hedge fund), Bayou (fraud), and anyone else you can think of. Bad guys, all of them. No argument here.
Does “One and Twenty” sound expensive? My biggest personal investment is a hedge fund of funds (with another 1.25% layer of fees) that has trounced anything a do-it-yourselfer has done with ETFs and the like, through good markets and bad. Hell, you can buy the S&P 500 for free. Here’s what you get: zero return over ten years with 18% annual volatility. I pay 3-4-ish percent annually with 1/3 of the vol and 6-7% annual return.
I don’t make the rules regarding the way society pays different professionals, but I recognize them. Is it unfair prison guards make more than teachers? Hell, yes. Also, I don’t like flying regional feeder airplanes flown by pilots making less than In’n’Out Burger managers. Still, people choosing low-paying careers and automatically hating those who make a lot of money are foolish.
I 100% agree that the US is becoming a two-tiered society, and it greatly concerns me. There are no stable two-tiered societies in the world, and we will end up no different if we do not change. That is why I donate my charitable time and dollars to organizations that promote education to high-risk youth. I also vote for every education bond and tax on the ballot. I am old enough to remember Prop 13, the Jarvis-Gann initiative, in 1978 here in CA. Bottom line: the naysayers (including me) were right. The tax savings screwed up my state’s schools, and guess what: education is the key to a thriving middle class.
I hope I have made you think about thing a little differently. I am now going quit this site so its readers can get back to reading about cars!
JLOSF