Porsche Pockets $17,250 Profit on Every Car
Comment of the Day

March 20 2017

Commentary by Eoin Treacy

Porsche Pockets $17,250 Profit on Every Car

This article by Kyle Stock for Bloomberg may be of interest to subscribers. Here is a section:

In short, every time Porsche sells a 911 sports car or one of its Cayenne SUVs, it could take the profit alone and go buy a brand new Chevy Cruze.

Its Teutonic peers don’t have nearly as much profit punch. Daimler AG pocketed about $5,000 a vehicle last year, roughly the same margin Bayerische Motoren Werke AG (BMW) has been managing. Part of the money magic is simply price. Porsche doesn’t make cheap cars. Even luxury players like Mercedes occasionally offer more pedestrian versions at narrower margins to get aspiring buyers into the family. And make no mistake, Porsche customers are paying a premium for the brand’s reputation.

Ferrari knows this game well. Its operating profit equates to almost $90,000 a vehicle. But about 30 percent of Ferrari’s business comes from engines, key chains, amusement parks, and other things that don’t have wheels. What’s more, the company makes only about 8,000 cars a year, scrimping on supply to keep prices high.

Eoin Treacy's view

Porsche might be making significant profits on every car it sells but the company is also among the largest shareholders in Volkswagen. It was far from immune to the fallout from the diesel scandal which saw the stock plummet from €95 to €35 and it has been heavily influenced by its parent’s performance since. 

The share has returned to test the region of the trend mean and a sustained move below €50 would be required to question medium-term potential for additional higher to lateral ranging. 

Ferrari on the other hand has been trending higher in a consistent manner since June and a break in the progression of higher reaction lows would be required to question demand dominance.

Back to top

You need to be logged in to comment.

New members registration