Quote:
Originally Posted by Macroni
Supply and demand is always a critical or principle element in pricing; How many and what the marketplace willing to pay at corresponding price point....
On the manufacturing or cost side of the equation; overhead or fixed cost absorption is another dominate price determinant. If you are building a niche product, units produced all absorb a percentage of overhead. Porsche did not build relatively many engines. They were not Ford or Chevy. Outside of actual cost of components as well as cost of assembly labor, these overhead costs including research, development, capital requirements are very sensitive to the number of units they are spread across.
Porsche could have created greater efficiency through more innovative manufacturing technology and practices but the invested capital requirement made for a poor return given the low cost of labor in the 60s & 70s and the small potential market they were serving. Greater efficiency would not create greater demand.
It was this philosophy or the inability to move from this philosophy that brought them to crisis in the late 80s and early 90s. Labor costs were skyrocketing and they were still a labor intense manufacturing process. (let's not even start a discussion on impact to quality) Porsche embraced Toyota's practices and the 993 represented the first model using an updated manufacturing process.
It is ironic, these are the same dynamics that caused Porsche to eventually sell to Volkswagen. Not enough scale to maintain a competitive product line.
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interesting...
the cost wasn't so much related to the components or materials but more based on manufacturing inefficiencies combined with economy of scale etc
safe to say the initial cost of the vehicles back in the day was based more on multiple economic factors rather then intrinsic
i could understand the resistance to assembly line manufacturing based on the simplicity of the 911 - i cant think of an easier car to put together