Thoughts on Porsche’s Troubles
We’re going to do a little speculating here. But these thoughts are not blue-sky blah-blah; they are based on what has been reported in the last few days about Porsche. It seems to me that the company may be in big trouble, and here are the reasons.
With Volkswagen planning a full merger with Porsche by 2011, CEO Martin Winterkorn is putting the heat on to get the volume up—big-time. We recently reported that Porsche has been given a well-nigh impossible sales goal of 150,000 cars per year by 2012. With the company presently selling 75,000 cars a year, such a requirement means: a) lowering prices, adding incentives, etc., or b) making some newer, cheaper models for a wider market.
With its debt load reaching close to $9 billion, Porsche will find these alternatives hard to execute. Winterkorn says he wants a new car smaller than the Boxster, a junior Cayenne, and some kind of new Panamera. Maybe he’s talking about the BlueSport roadster (below) for the former, which would be nice.
So our brother/sister bloggers are speculating about zingy new cars, which of course is what Marty wants them to do. But the reality is that Porsche’s (and VW’s) stock is doing badly; there is actually a glut of inventory, with dealers holding more than 100 days’ supply of 911s, Caymans, and Boxsters; and production has been cut back.
As I recall, Porsche almost bought the farm the last time we had a recession of this magnitude (late ’80s, early ’90s). The mortgage brokers, stockbrokers, realtors and other assorted financial hucksters that bought these [cars] are now waiting tables at TGI Fridays.
Others pointed out that Porsche’s cars have been overpriced for years. Another, looking at figures on AutoTrader, found that “Porsche sold just 651 new 911s last month if you total up all the various configurations.” From this to 150,000 units a year??
My son, who is not a financial huckster, owns a 2004 911-C2 and told me he needed two new rear tires, again, at about $300 per. They last only 10-15,000 miles. Then there’s the regular Mobil-1 12-quart oil change that will run you around $200, including filter and labor.
You know the old saw attributed to J.P. Morgan: When asked about the cost of buying a yacht, the financier replied, “If you have to ask, then you probably can’t afford it.” It would be a shame to see Porsche go the way of Morgan’s yacht.
Do you think we’ll see newer, cheaper Porsches? Or devalued, less-expensive Boxsters and Cayennes?