Porsche Cayenne Facelifted

[Matt]

They were already one most the most profitable car manufacturers before making the Cayenne.

At one time, yes. But, just prior to the introduction and resulting sales explosion of the Cayenne, Porsche was in serious trouble. They had idled much of their production facilities because of lack of money. When Cayenne went into production, nearly all production capacity was shifted to Cayenne so they could build some capital.

[Quiggs]

Maybe at profit per vehicle. But they don't move the volume that's needed to continue being profitable and move ahead in development.

It's a lot easier to make money with smaller margins on larger sales than larger margins on smaller sales.

[henk4]

It's a lot easier to make money with smaller margins on larger sales than larger margins on smaller sales.

I would say that applies to a limited number of companies.... certainly not those in the USA....and Italy (both Fiat AND Ferrari do not meet your proposition) and VAG is not in a very enviable position either...

[Ferrer]

At one time, yes. But, just prior to the introduction and resulting sales explosion of the Cayenne, Porsche was in serious trouble. They had idled much of their production facilities because of lack of money. When Cayenne went into production, nearly all production capacity was shifted to Cayenne so they could build some capital.

If I'm not mistaken they were in trouble in the mid 90's when then demise of the 928 and the 968 brought their grand total of cars in their range to 1, the 911 (993-series). Then they introduced the Boxster (proper Porsche) which was the car that helped them to get out of trouble. Therefore they didn't need the Cayenne in the sense of getting out of a deep financial crisis, altough maybe the reason behind the Cayenne was the one Quiggs mentioned.

[Cotterik]

was there any point in trying

[Quiggs]

I would say that applies to a limited number of companies.... certainly not those in the USA....and Italy (both Fiat AND Ferrari do not meet your proposition) and VAG is not in a very enviable position either...

VAG and the US companies are having problems because their margins are too small and so are their sales.

But if you sell a lot of something, you can sell it at a little above cost and still make a lot of money. If you only sell a limited number of things, your margin has to be substantially larger to make that same profit. I know that's dumbing it down a lot, but I'd bet that Porsche sells less total cars in a year than, say, Toyota sells any 1 model in a quarter. And that's perfectly fine, since they're really a niche car maker.

[henk4]

But if you sell a lot of something, you can sell it at a little above cost and still make a lot of money. If you only sell a limited number of things, your margin has to be substantially larger to make that same profit.

I am aware of the principles of pricing theory
but are you now not confusing the absolute profit with the relative one?
And by the way if you sell a lot just a little bit over cost, then your return on investment is rather marginal too...

[Ferrer]

I don't think that discussing the Cayenne from the economic point view is worth it, we all know it's been a huge success. It's a lot more interesting to discuss it as a car.

[Quiggs]

And by the way if you sell a lot just a little bit over cost, then your return on investment is rather marginal too...

Very true. And that's a major part of why VW and the American companies are doing so poorly. Ford and GM's margins are being eaten up by the UAW/retired workers, and in the case of Gm Delphi's situation isn't helping. As for VW... Well. They suck as a company.

[henk4]

It's a lot more interesting to discuss it as a car.

never realised it is one....

[derekthetree]

and thank the Cayenne for Porsche taking control of VW?

don't porsche own 20% of vw but also vw own 20% of porsche?

i believe it is to block takeover bids.

[henk4]

don't porsche own 20% of vw but also vw own 20% of porsche?

i believe it is to block takeover bids.

Porsche owns close to 29%. There are special laws regarding the ownership of VW, which is also partly owned by the Government of the Province in which the company is located. If Porsche will get more than 30% according to this law they become the majority shareholder

[Quiggs]

Porsche owns close to 30%, but they can only exercise up to 20% in stockholder decisions.

http://forums.vwvortex.com/zerothread?id=2932639

[Waugh-terfall]

Porsche owns close to 30%, but they can only exercise up to 20% in stockholder decisions.

http://forums.vwvortex.com/zerothread?id=2932639

Quiggs has got it, it's all up on the wall in my Business Studies class room about the shares etc..

[Quiggs]

Porsche holds a bit of a loophole for this though, since Piech still holds a lot of share in Porsche, and his family is part of the Porsche family. So Porsche's shares plus Piech's shares may be enough to push them to a point where their joint decisions would be for all intents and purposes a controlling interest.