Profit margin on the new 997 turbo

[Netspeed]

I found this article on Racer.com
Porsche 911 Turbo: Paddling ahead - Racer.com

Of note:
"To build and bring to market a 997 Turbo, it costs Porsche less than $10,000 more per car than it does to build and bring to market a Boxster. Work out the difference between the average price of a Boxster compared with that of the 911 Turbo and you get an idea as to how profitable Porsche's range-topper really is. And that's before customers go anywhere near the expensive options list."

[OZCarrera3]

I'll be there first to say that Porsche is commercial enterprise, primarily responsible for making money for its shareholders - as much money as possible. Also, the manufacturing cost of a car has little to do with the price to the purchaser.

There are many aspects that determine the cost of a car to the buyer, you have to take into consideration:

1. The development and design costs (including making enough money to continue with research and future designs).
2. Materials and build costs (what was compared here - I wouldn't doubt that there is less than $10k difference in materials and build costs).
3. Holding and transportation costs.
4. Compliance costs for each market (for example, Australia has very particular design and safety requirements, many of which are unique to this country).
5. Dealer delivery costs and profit margin.
5. And finally, the price that the market is willing to pay.

With every car manufacturer, the base model car like the Boxster always has a smaller profit margin compared to the top of the range model. Sure Porsche is (was) the most profitable car maker in the world. But to continue designing the best sports cars in the world (with some of the most advanced designs available), with such relatively small volumes, they need to make a lot of money off each unit sold.

This article is just there to be emotive and create "outrage". Not worth promoting this type of nonesense.

[Netspeed]

I just thought the 10k figure was interesting

[Rrrockhound]

It is interesting, if it's true. But it doesn't really mean anything, because those are 10K wholesale dollars. You couldn't turn a Boxster into a 997 Turbo for 10 grand.

[Formerly Steve Wilkinson]

Several years ago I spent a week on Sardinia driving a Lamborghini, with Lambo's then-PR director. We got to know each other pretty well, and at one point, he told me the urban legend about how Ferruchio Lamborghini got into the car-building business because Enzo Ferrari insulted him is baloney.

The true story, he said, is that one of Lamborghini's cars, indeed a Ferrari, needed a clutch job. Ferruchio called the Ferrari factory and they said they were really backed up, many apologies, but the soonest appointment they could give him was a month away. So Lamborghini called the chief mechanic at his tractor factory and asked him, can you replace the clutch in my Ferrari?

Of course, the guy said, no big deal.

Couple of days later, the mechanic came into Ferruchio's office and put a clutch on the boss's desk. "This is the new clutch I'm about to put into your Ferrari. It costs five million lire," he said. Then he put an absolutely identical clutch, same manufacturer, same clutch, down next to it. "This is the clutch we put into our tractors. It costs 5,000 lire." (I'm just making up the lire numbers but not the disparity.)

At that point, a light went on in Ferruchio's head and he suddenly understood the principle of "value added." So does Porsche. They both are in the business of making horrendously overpriced, "value-added" cars.

I got smoked today by one of those winged, rice-racer Mitsubishis. But I have a once-expensive 911 and he doesn't, right?

[Netspeed]

Originally Posted by Rrrockhound

It is interesting, if it's true. But it doesn't really mean anything, because those are 10K wholesale dollars. You couldn't turn a Boxster into a 997 Turbo for 10 grand.

It might be a pure manufacturing value.....

Total economies of scale. I remember in the 80's when GM tried to build a $14k Fiero from the parts bin. It totaled around $36k....

[Netspeed]

Originally Posted by Formerly Steve Wilkinson

Several years ago I spent a week on Sardinia driving a Lamborghini, with Lambo's then-PR director. We got to know each other pretty well, and at one point, he told me the urban legend about how Ferruchio Lamborghini got into the car-building business because Enzo Ferrari insulted him is baloney.

The true story, he said, is that one of Lamborghini's cars, indeed a Ferrari, needed a clutch job. Ferruchio called the Ferrari factory and they said they were really backed up, many apologies, but the soonest appointment they could give him was a month away. So Lamborghini called the chief mechanic at his tractor factory and asked him, can you replace the clutch in my Ferrari?

Of course, the guy said, no big deal.

Couple of days later, the mechanic came into Ferruchio's office and put a clutch on the boss's desk. "This is the new clutch I'm about to put into your Ferrari. It costs five million lire," he said. Then he put an absolutely identical clutch, same manufacturer, same clutch, down next to it. "This is the clutch we put into our tractors. It costs 5,000 lire." (I'm just making up the lire numbers but not the disparity.)

At that point, a light went on in Ferruchio's head and he suddenly understood the principle of "value added." So does Porsche. They both are in the business of making horrendously overpriced, "value-added" cars.

I got smoked today by one of those winged, rice-racer Mitsubishis. But I have a once-expensive 911 and he doesn't, right?

I have a neighbor with a modded STI that always wants to go head-to-head. I asked him if he was kidding but then add if his car has gone up in value lately.